All three broad stock market indices (DOW, S&P 500 and NASDAQ) started new medium-term cycles with their lows on Feb. 9 (that would be 23,360, 2,532, 6,630, respectively). After rallying from there and peaking in mid-March, all three indices have been falling and appear to have made their first sub-cycle correction with this week's lows on Monday. All three lows on Monday were very close to the Feb. 9 lows that started the new medium-term cycle, and one (the DOW) broke lower than its Feb. 9 low. This strongly suggests that these indices will be bearish and pointed down until the end of their medium-term cycles (due 7 to 15 weeks from now). Shorter-term, however, we can expect a rally from this week's lows. The strength of that rally will tell us if we are correct in our longer-term bearish view of this market.
We covered our short position in the broad stock market late in today's trading in anticipation of this rally that should continue into next week's reversal zone. This new reversal zone is a strong one and actually starts tomorrow (April 5 - 13, mid-point April 10). Assuming we rally into next week and the rally doesn't get too high, we will look for another top to sell short. Unlike last week's correction, the correction from this top should be very steep and take us well below those Feb. 9 lows. This will be our projected scenario going forward (unless the market forces us to alter it). On the sidelines of the broad stock market for now.
Gold and silver prices have been down this week, but there is a strong possibility of both metals making a bottom over the next two days or even early next week. If gold or silver (but not both) makes a new weekly low this week or next, that would be a bullish (divergence) signal and would reinforce the idea of a bottom forming soon for both metals (with a strong rally to follow). It would also be a good spot to buy silver, especially if silver breaks below $16.13 while gold holds above $1,304. Let's hold our long position in gold for now and watch for that set up to buy silver.
After falling for over a week, crude oil prices may be stabilizing just above $63 (May contract chart) and could rally again if the broad stock market chooses to do so (as crude seems to be taking its cues from equity markets). It is late in the medium-term cycle for crude, but there is still time for it to make a new high (above $66.55) before falling to its final cycle bottom. If that second high happens, it will be a good place to sell short. Still on the sidelines of crude oil,