We were stopped out of our short positions in the broad stock market (NASDAQ) last week because all three indices (DOW, S&P 500, NASDAQ) made new all-time highs, negating our bearish divergence signal. It looks like all three indices are early (young) in their medium-term cycles. This means there is a good chance they could rally many more weeks before reaching their cycle tops. I am still anticipating a sub-cycle correction in these indices very soon, but we will not try and sell it short again. Instead, we may look to buy the bottom of any corrective dip that doesn't go too low, with the idea of it being followed by another strong rally, perhaps into the end of the year. (Long-term traders may just want to wait to sell short at that final top, as it will likely be followed by a MAJOR long-term correction (i.e the "big one" we have been anticipating for some time). Targets for a short-term correction now could be around 35,000 in the DOW, 4,500 in the S&P 500, and 15,000 in the NASDAQ. We will watch for possible buying opportunities in these areas. We are back on the sidelines of the broad stock market for now.
It looks like gold may have made a significant sub-cycle top with its high of $1812 on Oct. 22. If this is correct, it is now correcting down to the sub-cycle bottom which could happen this week or next (and especially in our new reversal zone specifically for the precious metals coming up Nov. 4 - 15). If this correction can stay above $1746, and especially above $1722, gold can still be bullish and could rally to challenge the September high of $1833. Clearing that could lead to gold prices back above $1900. An alternative scenario could unfold If gold doesn't move below last Friday's low ($1773) this week. Gold could rally above $1812 and cause us to relabel the sub-cycle top this week or next. If it can rally above $1833, that would confirm that this current medium-term cycle is bullish. For now, we will go with the idea that the sub-cycle top was Oct. 12 ($1812) and a correction is in progress.
It looks like silver's medium-term cycle is younger than gold's, and silver also looks very bullish at the moment. Friday's low at $23.67 may have been a sub-cycle bottom. If so, silver could rally strongly now. If gold makes a new weekly low next week and silver can stay above $23.67, we would have a strong intermarket bullish divergence signal to buy. Ideally, that would happen in our reversal zone for precious metals coming up this Thursday (Nov. 4 - 15).
If silver does break below $23.67, it can still make a sub-cycle bottom in our reversal zone this week or next and be a good spot to buy (as long as prices stay above $21.44). We will watch for these possible buying opportunities over the next two weeks.
We are currently on the sidelines of both gold and silver.