It appears that the S&P 500 and NASDAQ made significant all-time highs last Thursday and are now in the process of making some sort of correction. The DOW, however, did not make a new all-time high last week, and although it did make a new weekly high yesterday, it is still below its all-time high of 34,257 from April 16. We therefore still have a bearish divergence signal between the DOW and the other two indices. Even if the DOW pushes to a new all-time high over the next day or two (it is close and, unlike the S&P 500 and NASDAQ, it seems reluctant to fall), we will still have bearish divergence as long as the S&P 500 and NASDAQ do not make new all-time highs.
So far, our short position in the broad stock market looks good, especially if you sold short the NASDAQ, which is falling steeply. If you shorted the DOW, a correction may be forthcoming as all three indices will almost always take significant corrections together. One's stop loss on any short DOW position COULD be based on this index making a new all-time high (i.e. closing above 34,257), but unless the S&P 500 and NASDAQ start to rally strongly and make new highs, I would hold my short position in the DOW for now. We will hold our short positions in the broad stock market today.
It is now more certain that gold did start a new medium-term cycle with its low of $1677 on March 8. This means it is a young cycle and could be quite bullish now. Our strategy here will be to wait for a significant sub-cycle correction to buy. Last Thursday's dip may have been one already, but if prices start falling below that low ($1759) this week, we may see a buying opportunity in the $1700 - $1740 range. Still on the sidelines of gold.
Silver is also most likely in a new medium-term cycle that started on March 31 (at $23.80) and is bullish. As with gold, we will now look for corrective declines to buy. Silver made a new weekly high today while gold did not. This bearish divergence may mean a correction is imminent. A drop to the $25 area could give us a buying opportunity. Let's stay on the sidelines of silver for now.
Crude oil most likely started a new medium-term cycle on March 23 at $57.29 (June contract chart). Today it is making a new high for this cycle at $65.84. As with the precious metals, we will stay out of this market until we see a significant correction that gives us a good buy spot. That could come this week or next as a sub-cycle low is now due. A peak this late in the first sub-cycle indicates this market is bullish. We will remain on the sidelines for now.