The broad stock market frequently rallies into holiday week-ends, and we are moving into one now in the U.S. (Fourth of July week-end). This bullish factor and a favorable jobs report today pushed equities higher in early trading, but the enthusiastic rally lost some of it's steam as more increases in COVID-19 cases were reported, and the markets closed with minor gains.
Today the NASDAQ made a new all-time high and the S&P 500 made a new weekly high, but the DOW stayed below its high from last week. We still have a strong case of intermarket BEARISH divergence with the DOW and S&P 500 well below their February all-time highs (29,568 and 3,393, respectively) against the NASDAQ's new all-time highs. Although the S&P 500 edged a bit into its "gap zone" (3,123 - 3,181) today, it certainly did not close the gap, and the DOW backed down before even entering its gap zone (26,294 - 26,938). I think we are still on track for a correction down now into mid-July, but we will still keep in mind the possibility of a bullish surge instead (anything seems to be possible in today's markets). Remaining on the sidelines of the broad stock market.
Gold and silver may also be ready to turn down for a significant correction now. BOTH metals made new cycle highs yesterday. That may be a top; however, we like to see bearish divergence at significant tops which we are not getting this week. Perhaps one metal (but not the other) will edge up to a new high early next week and give us that bearish signal before correcting down. We are still waiting for a final corrective low to buy in the current medium-term cycle for both gold and silver. On the sidelines of both metals for now.
Crude oil has been rallying with the broad stock market, but it may fall with it as well if equities turn down as we expect. Last week's high in crude at $42.26 (June contract chart) looks like a significant sub-cycle top, and if so, we should soon see a significant correction down to the $37 area or lower. We will watch for that as a buy spot. If instead prices rally above that $42.26 high, we may have to wait a bit longer for a place to buy. Still on the sidelines of crude oil.
HAPPY FOURTH OF JULY TO ALL READERS OF THE BLOG!