We are now touching my target area for a high in the S&P 500 (1990) but are still a little short of my 17,300 target for the DOW. Directional momentum remains strongly bullish in both these indices but is weakening a little. I want to see at least a short-term sell signal before shorting this market. We may get that any day now as we are at the center of another timing window for a likely reversal (July 25), but August 8th is another likely reversal time so it is still possible for the broad stock market to rally a little more before taking what could be a substantial correction of
8-15% (and possibly more). On the sidelines and watching this market closely now for a top to sell short.
In my last blog I mentioned that silver was looking a little more bearish than gold. Today both metals fell, but the plunge in silver was stronger as it dropped over 2% (gold fell less than 1%). This sudden drop in precious metal prices should not be a surprise to regular readers of this blog as I had been warning of potential short-term downside in these metals before a long-term bottom to buy. Gold is at my target price of $1290 but silver is still significantly over my $20 target. Short-term signals are leaning towards bearish at the moment and the cycle structure in silver charts indicates that this correction could go as low as the $19.50 area. For these reasons I am holding off on any buying today. If gold can stabilize in the $1280-$1290 area while silver drops to the $19.50 - $20.00 area, we could see a good buy spot shortly. On the other hand, if gold prices take a cue from silver and start to break down we might be looking into early August for a bottom in precious metals. Still on the sidelines and waiting to buy.