The broad stock market is now at a critical juncture. The current corrective dive has reached a strong support level.
For the DOW, a critical level now would be the 25,743 low that started the current medium-term cycle back on 10/3/19. In the S&P 500, there is critical support around 3,000, and in the NASDAQ around 8,800. A weekly close below these supports could be bad news for equity markets suggesting a strongly bearish trend and an even bigger correction.
If these supports can hold, however, we could be at the final bottoms of the medium-term cycles for all three indices and an ideal spot to buy. This idea is supported by the fact that we are now at the dead center of a strong critical reversal zone (Feb. 24 - March 6) which means a strong reversal back up could be imminent. Let's wait and see if this market can hold support into the end of the week before we consider any long positions. Still on the sidelines of the broad stock market.
Crude oil prices have now broken below the Feb. 4 low of $49.50 that may have started a new medium-term cycle. If so, this market's trend is now very bearish. But since we are in a strong reversal zone, it's possible crude is still completing an older cycle that will find its bottom by the end of next week. That cycle labeling would be more bullish. Let's remain on the sidelines of this market until these cycles are more clear.
Gold and silver prices have also been correcting down, but not quite enough to encourage me to buy. Let's also remain on the sidelines of this market for now.
I have been ignoring the U.S. Dollar Index recently because it has been moving in tandem with precious metal prices (which is unusual as these two markets normally move in opposite directions), and thus it has not been a reliable contra-indicator for gold and silver. This recent trend is being driven by the current investor flight to "safe haven" investments (perceived to be gold, silver, and the U.S. dollar) as equity markets look increasingly vulnerable and "crash prone". The greenback rallied strongly this month with the U.S. Dollar Index nearly touching the 100 mark late last week. It is falling back (so far) this week. 103.82 is an important level to watch in this index. A break above there would be a very bullish development for the dollar. If coronavirus fears (and/or other bearish factors) cause a major tanking of the broad stock market, we could see gold, silver, AND the U.S. dollar rally strongly.