Today all three broad stock market indices rallied strongly, but only the S&P 500 and NASDAQ made new highs. The DOW got to 28,068 - just short of last week's high of 28,090. This gives us an intermarket bearish divergence signal inside a reversal zone (Nov. 20 - 27) that ends on Wednesday. Unless the DOW pushes past 28,090 tomorrow (very possible), we could see a reversal now in equities and the start of a sharp correction. Although I am tempted to sell short here, I think any correction will be brief as the overall trend of this market is still bullish (directional momentum is now 100% bullish in all three indices) so I am going to stay on the sidelines and wait for the bottom of any correction to buy. If the DOW does make a new high this week, we might even see a rally continue into our next reversal zone (Dec. 6 - 17); otherwise, we will watch for a correction down and a low to buy, possibly in that Dec. reversal zone. Staying on the sidelines of the broad stock market for now.
Gold and silver prices pushed lower today. The cycle patterns are still not clear for either metal so we are going to stay on the sidelines for now. We are still in a reversal zone for precious metals (Nov. 20 - 27) so we could see a bottom by Wednesday and a reversal back up. But last week's highs were also in this reversal zone so prices could just push lower into next week. Ideally, we would like to see a bottom in gold around $1400 and silver around $15.50. If prices get there, we will be looking to buy.
We may have missed a good buy spot with last Wednesday's low of $54.85 (Jan. contract chart) in crude oil - assuming that was a legitimate sub-cycle correction (it happened very fast). If it was, prices should rally now to a possible target of $61- $62 over the next several weeks. But it's still possible for prices to make another high in the current reversal zone (Nov. 20 - Dec. 2) and make another sharp correction down. If that happens, we will look to buy that low. We are still on the sidelines of this market.