We are now free and clear of this month's strong reversal zones, and it looks like a rally is underway in new medium-term cycles that began two weeks ago in all three of our broad stock market indices (DOW, S&P 500, NASDAQ). Our next general reversal zone is coming up April 11 - 20, but it is slightly weaker in strength than those we saw this month. We also have a brief short-term reversal zone coming up next week from Wednesday - Friday which abuts that larger reversal window, so we could see some high volatility within this entire time frame (i.e. April 5 - 20).
We should see this rally continue at least into late next week before encountering any serious resistance, so we will hold our long position in this market for now. Because these new medium-term cycles are young, there's a good chance they will rally for many more weeks (with corrective dips along the way). It wouldn't be unusual to see the DOW challenge its December 13, 2022 high (34,712), and the S&P 500 and NASDAQ could easily test their Feb. 2 highs (4,195 and 12,270, respectively). If those highs are breached, these new medium-term cycles would officially have a bullish trend, and there is a possibility of seeing at least the DOW challenge its all-time high of 36,723. (The S&P 500 and especially the NASDAQ are unlikely to do the same). If that happens, we would have a VERY strong intermarket bearish divergence signal to sell short. I am speculating here, of course, for these markets could turn bearish anytime now, and we need to take this one step at a time. A rally into next week is the first step.
As a reminder, our longer-term view is still focused on the idea that the broad stock market has already made a long-term (90-year) cycle top with the all-time highs of Jan. 2022 (DOW and S&P 500) and Nov. 2021 (NASDAQ) and that the process of correcting down to the final 90-year cycle bottom (at least 50% from those highs) is in progress. It would take a break above ALL THREE of those highs to negate this idea.
Last week's highs in gold and silver seem to be holding, but both metals seem reluctant to drop strongly in price - something we want to see if the trend is turning bearish. As I have discussed in recent blogs, it is especially important for gold to stay under $2000 and drop sharply soon in order to confirm that an old 23-year cycle is in place and about to to take its final sharp correction down to its final bottom due next year. That is still our preferred scenario, and we will hold our short position in gold for now with a stop loss based on prices closing above $2000.
Silver may edge up to a new high over the next day or two, but there are no reversal zones or pivot points next week, so we could easily see some sort of top and corrective dip in silver shortly, especially if gold prices drop some more. If that happens, we will likely look for a good spot to buy (as long as any correction holds above $20). We are still on the sidelines of silver.
Crude oil prices continue to rally strongly from last week's deep bottom at $64.36 (May contract chart) suggesting that was the start of a new medium-term cycle. Prices are now closing above the 15-day moving average which is another bullish sign (but they are still below the 45-day moving average). There is a strong line of resistance at $75 (which is currently converging with the 45-day moving average), so prices may be pushed back down from there. Any pullback now that holds above $65 may be a good spot to buy, but if prices start moving below there, we may have to wait for a lower low to buy sometime in April (or maybe even May). We are still on the sidelines of this market.