We are now approaching the center of our reversal zone for equities (May 21 - June 1). All three market indices (DOW, S&P 500, NASDAQ) are continuing their rallies today with each making new weekly highs. What we want to look for now is for one or two of these indices, but not all three, to make a new all-time high. Right now the S&P 500 is very close to doing this, the DOW is not too far away, but the NASDAQ has to cross some distance (and resistance) to break its all-time high. If we see the DOW and/or S&P 500 make new all-time highs this week or early next week without the NASDAQ, that will be a strong bearish divergence signal and another opportunity to sell this market short. We are still on the sidelines of the broad stock market, but looking to sell short soon.
We are still in a reversal zone specifically for the precious metals (May 17 - 26) that ends this Wednesday. Silver most likely made its top last Tuesday at $28.65, but gold looks like it wants to go higher than its high of $1887 from last Wednesday. If gold makes a new weekly high this week without silver, that would be a strong intermarket bearish divergence signal which could easily be followed by a sharp correction down by both metals into our ideal corrective targets (now between $1790 - $1840 for gold and $24 - $27 for silver). We will watch for buy spots in these ranges over the next week or two. On the sidelines of both metals for now.
Crude oil most likely made a sub-cycle low on Friday at $61.56 (July contract chart). Prices rallied sharply from there today. This abrupt jump from a low in only the first day of crude's reversal zone (May 21 - June 1) has taken us by surprise. Because prices are already nearly back up to last week's high, it's a bit late to buy. A strong rally this week and/or next, however, could lead to another sub-cycle peak and sharp correction which might give us a better spot to go long. We are anticipating prices to eventually get at least up to $75. Still on the sidelines of crude oil.