Our decision to go long in the broad stock market last Wednesday seems to have been a good one as this market is now rallying strongly with both the DOW and NASDAQ making new yearly highs today and the S&P 500 making a new all-time high. This is strong evidence that all three indices started new medium-term cycles on June 27 (the bottom of the "Brexit crash") and are now bullish. Further support for this view is the fact that directional momentum in the charts of these indices is now 100% bullish for all three. We may see a brief pullback this week or next, but the DOW will likely hold above 17,400 and the S&P 500 above 2,040. We can still use these levels as a general stop loss for our long positions. It is starting to look like several longer-term cycles in the broad stock market have also bottomed recently, and if so we could easily see this market rally for at least eight weeks (or even longer into the U.S. presidential election in November). Holding my long position in the broad stock market.
The price surge in gold and silver earlier this month has leveled off, and this week is a reversal zone for these precious metals (especially the second half of the week). The COT (Commitment of Traders) charts still show the "smart money" very bearish on both metals so a sharp correction could be imminent. This is especially relevant to silver because it has not yet made its medium-term cycle bottom. That bottom is due any time between now and mid-August (gold already made its cycle bottom on May 31 and is therefore a little more bullish than silver right now). Despite all of this, the medium and longer-term trend for gold and silver appears to be turning bullish so we want to be on the lookout to buy any short-term corrections. A good price level to do this would be around $1,300 in gold and $18 in silver. Let's wait and see how these metals move into Friday. If silver continues to rally (and especially if silver makes a new high and gold does not - or vice-versa) then I may go short for a short-term correction in silver. Once we see a correction in both gold and silver (ideally to the price levels stated above) we will be looking to go long in both metals. On the sidelines of gold and silver for now.
Crude oil prices continue to fall and are now entering the upper part of our original price target ($40 - $45) for a final medium-term cycle bottom (which is due this week or next). We should now be looking for a bottom to buy. Today prices got to $44.42 (August contract chart) but it looks like they could go lower. If the broad stock market pulls back this week, we could see crude fall lower and deeper into our target range. We will wait for a short-term buy signal sometime this week or next. On the sidelines of crude but waiting to go long now.