In Monday's blog on the broad stock market I wrote:
"If this market is going to turn bullish, it has to rise now and overcome the heavy resistance at the "gap zone" described above."
That "gap zone" in the DOW is between 26,300 and 26,900. On Tuesday the DOW rallied to 26,600, but it has been falling from there and closed today just below 26,000. The S&P 500 also hasn't been able to close its gap.
The NASDAQ, however, has closed its gap, but it seems to be pausing now at the top of that gap. We have no intermarket bearish divergence this week as all three indices have made new weekly highs, but if the NASDAQ makes a new all-time high tomorrow or next week (it is very close) and the DOW and S&P 500 remain below their February all-time highs, we WILL have a strong bearish divergence signal. We are approaching the center-point of our current very wide reversal zone (June 8 - 30), but it is still not clear if we are going to get a high that reverses down or a low that reverses up. We'll have to wait a few more days to see if equities can clear those "gap" areas, or whether that gap resistance will force the market lower into next week. Still on the sidelines.
Gold and silver prices have been very flat this week. Nevertheless, some technical signals are still suggesting a big move now. The only problem is that, as with the broad stock market, it is not clear in which direction it will be. We will remain on the sidelines for now and wait for a clear top or bottom to trade. This should be forthcoming as we are in the middle of a very strong reversal zone.
Crude oil may have made a significant sub-cycle low last Friday at $37.07 (June contract chart), but the rally from there has not been that strong and seems to be hitting a wall around $40. There's plenty of time for a lower low into next week (as we are still in a strong reversal zone) which might give us a spot to buy. On the other hand, more rallying to a new high (above $42) could also give us an opportunity to sell short. As with the other markets, we will stay on the sidelines and wait for either a top or bottom into next week.