Next week is the center of a significant reversal zone for equities, precious metals, and currencies.
The broad stock market looks like it wants to rally into this reversal. Today the DOW is making a new high for August while the S&P 500 and NASDAQ are not so we already are getting an intermarket bearish divergence signal. If we get more bearish divergence next week, we will likely see a good opportunity to sell short. Still on the sidelines here.
Gold and silver fell dramatically this week with both metals making new lows for the year (gold at $1162 and silver at $14.35). Last week was not a reversal zone so it is likely gold and/or silver will make new lows next week. If one metal does this without the other then we will have a bullish divergence signal and most likely a good opportunity to go long in both gold and silver. We will watch for this. On the sidelines of gold and silver.
The U.S. Dollar Index rallied strongly this week to make a new high for the year on Tuesday at 96.79. If it can push a little higher into next week's reversal zone, it could be a set up for a top and correction down. Such a pivot point might synchronize with a bottom and reversal up in the precious metals. We will watch for this, but we will also keep in mind that gold, silver, and the U.S. dollar could also rise together (especially if equities start to fall).
Crude oil made a low at $64.51 (Sept.contract chart) on Wednesday, the first day of our reversal zone for crude
(Aug. 15 - 28), but I think it could go lower early next week (especially as that will overlap with all the other reversal zones). If prices stay above $63, we may see a good spot to go long. Still on the sidelines of crude oil.