Gold and silver appear to be taking a breather from their dramatic plunge as prices are rising significantly from Monday's lows into the end of this week. The big question, of course, is whether or not the correction is over. Gold moved down to $1322 on Monday and silver touched $22. While it is possible these are the bottoms, momentum indicators are still strongly bearish, and other technical signals are suggesting the correction may not be over yet. We will, therefore, stay on the sidelines for now and wait for clearer bullish or bearish signals.
The broad stock market is confirming my bearish suspicions discussed in the last blog (April 16). Strong bearish momentum signals appeared yesterday in charts of the S&P 500 and NASDAQ indices (but not yet in the DOW).
Because the industrial commodities copper and crude oil also continue to look bearish, we may be seeing the start of a serious correction in all of these markets right now (copper and oil prices often reflect the overall condition of the economy). If this turns out to be the case, we will be looking to sell the broad stock market short. Despite what Wall Street pundits and the mainstream media may say about the strength of the stock market now, cycle studies, timing factors, and technical analysis indicate an ongoing possibility of a substantial correction, and we need to keep an eye out for any signs that this is happening. As mentioned in previous blogs, we also need to temper any bearish views with the knowledge that these markets are likely being manipulated, and that the manipulators are trying to keep the market bullish. Such mixed directional signals obviously make this market hard to call, and we will remain on the sidelines until directions are more clear.
As mentioned in the last blog, the crude oil cycle has turned bearish, and our strategy now is to sell short any short-term rallies (as long as momentum remains bearish). A rally may be starting now as the price of crude jumped up today (intraday) to break $88 from a low below $86 on Thursday. Out of crude for now, but looking to sell short.