UPDATES on the BROAD STOCK MARKET, GOLD, SILVER, and the U.S. DOLLAR INDEX (10:00 pm EST)
The broad stock market gave us a vigorous "Santa Claus" rally this year. This rally has propelled all three of our stock market indices (DOW, S&P 500, NASDAQ) vigorously up from the start of their current medium-term cycles (their lows on Oct. 26-27) to new yearly highs in the S&P 500 and NASDAQ and a new all-time high in the DOW (37,779 - just yesterday). All three indices were down slightly today - the last trading day of the year - perhaps foreshadowing a down-turn next week.
We note that a strong bearish divergence signal continues in this market with the DOW being the only index exceeding it's all-time high from Jan. 2022. The S&P 500 is close - almost touching its all-time high from Jan. 2022 (4,819), but the NASDAQ has to climb a bit more to reach its Nov. 2021 all-time high of 16,212. This means a correction down could be imminent, especially as we are inside a minor general reversal zone through next Thursday. We also note that all three indices have been rising continuously from their Oct. 27 medium-term cycle starting points with no significant corrections along the way. A sharp sub-cycle correction is now overdue, and the mid-point of the cycle (where we are now) is the ideal place for one to happen.
We now wait for a corrective dip that could give us a good spot to buy for more rallying into the new year. Because we are near the medium-term cycle center, a corrective drop now could be quite sharp, but as long as it stays above the October lows, it should be a good buying opportunity because the cycle's trend is bullish until it breaks below those lows (32,327, 4104, and 12,544 in the DOW, S&P 500 and NASDAQ, respectively). A correction now will certainly break below the 15-day moving average, and maybe even below the 45-day moving average. Let's wait for it as we remain on the sidelines of this market.
After a new weekly high yesterday, gold is down a bit today. Silver did not make a new weekly high this week so we have a bearish divergence signal between the two metals. Silver looks a little more bearish at the moment as it tests the 15-day and 45-day moving averages, with gold still above those averages. A rollover in prices may be starting, but gold still has time to make another leap up and challenge that all-time high it made 4 weeks ago ($2123) before falling to the final corrective bottom of the current medium-term cycle (due sometime between mid-January and late February. We will likely remain on the sidelines of both metals until they form their current medium-term cycle bottoms. We are now on the sidelines of both gold and silver.
The U.S. Dollar Index made an isolated low yesterday and is bouncing off of support near 101. We enter a reversal zone specifically for currencies next week (Jan. 1 - 9). If the dollar drops lower into that time frame, it could set the stage for a strong rally back up. But if instead the greenback rises into the reversal zone, we could see an even deeper plunge. Whichever way it goes, the precious metals will likely move in the opposite direction.
The broad stock market gave us a vigorous "Santa Claus" rally this year. This rally has propelled all three of our stock market indices (DOW, S&P 500, NASDAQ) vigorously up from the start of their current medium-term cycles (their lows on Oct. 26-27) to new yearly highs in the S&P 500 and NASDAQ and a new all-time high in the DOW (37,779 - just yesterday). All three indices were down slightly today - the last trading day of the year - perhaps foreshadowing a down-turn next week.
We note that a strong bearish divergence signal continues in this market with the DOW being the only index exceeding it's all-time high from Jan. 2022. The S&P 500 is close - almost touching its all-time high from Jan. 2022 (4,819), but the NASDAQ has to climb a bit more to reach its Nov. 2021 all-time high of 16,212. This means a correction down could be imminent, especially as we are inside a minor general reversal zone through next Thursday. We also note that all three indices have been rising continuously from their Oct. 27 medium-term cycle starting points with no significant corrections along the way. A sharp sub-cycle correction is now overdue, and the mid-point of the cycle (where we are now) is the ideal place for one to happen.
We now wait for a corrective dip that could give us a good spot to buy for more rallying into the new year. Because we are near the medium-term cycle center, a corrective drop now could be quite sharp, but as long as it stays above the October lows, it should be a good buying opportunity because the cycle's trend is bullish until it breaks below those lows (32,327, 4104, and 12,544 in the DOW, S&P 500 and NASDAQ, respectively). A correction now will certainly break below the 15-day moving average, and maybe even below the 45-day moving average. Let's wait for it as we remain on the sidelines of this market.
After a new weekly high yesterday, gold is down a bit today. Silver did not make a new weekly high this week so we have a bearish divergence signal between the two metals. Silver looks a little more bearish at the moment as it tests the 15-day and 45-day moving averages, with gold still above those averages. A rollover in prices may be starting, but gold still has time to make another leap up and challenge that all-time high it made 4 weeks ago ($2123) before falling to the final corrective bottom of the current medium-term cycle (due sometime between mid-January and late February. We will likely remain on the sidelines of both metals until they form their current medium-term cycle bottoms. We are now on the sidelines of both gold and silver.
The U.S. Dollar Index made an isolated low yesterday and is bouncing off of support near 101. We enter a reversal zone specifically for currencies next week (Jan. 1 - 9). If the dollar drops lower into that time frame, it could set the stage for a strong rally back up. But if instead the greenback rises into the reversal zone, we could see an even deeper plunge. Whichever way it goes, the precious metals will likely move in the opposite direction.
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