This week made nothing more than confirm my views from the week ago. Stocks dropped from the bearish topping pattern and should now face some sort of a bounce from oversold levels. The 2600 area on Nasdaq looks like a good spot to look for shorting opportunities. The MA200 now finally and completely turned down. Past analysis that I've made some time ago revealed that when MA200 changes its course, this usually means a long term trend reversal. From my point of view, we are now in a confirmed bear market. What does this mean? It means that every rally should be very choppy and short lived. The tendence to go is now on the downside and so should be our trading strategies. It is still pretty early in an intermediate cycle. Current cycle bottomed seven weeks ago. Cycles in bear market tend to be of a bit shorter duration, but we should see at least ten more weeks of generally lower prices. Only when this cycle bottoms, I will start looking for possible longs.
Gold action is still a bit unclear. On first glance the triangle consolidation looks bullish, but frankly, I don't think gold is going to break out. If stocks are in a bear market and dollar in an intermediate cycle rally, it simply doesn't make any sense for gold to breakout and rally above 2000. But markets often don't make sense, so I'll refrain from any speculation about the direction of the breakout until it really happens.
Even if gold breaks to the downside I have no intention whatsoever to short and precious metals index or stock. If I learned anything in the past two years is to buy bull markets only and short bear markets only. So, my strategy for the next couple of weeks is to try to catch a short term top in stocks and IF gold triangle breaks to the the upside, buy a position in precious metals. Just in case this turns out to be the last obvious consolidation area before the final climax run.
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