All three of our broad stock market indices (DOW, S&P 500, NASDAQ) have been falling from the new weekly highs they made on Tuesday. Although we had no bearish divergence signal on Tuesday, it looks like we are seeing a significant sub-cycle correction in progress, so we will be watching for a bottom to buy, perhaps in next week's reversal zone (Aug, 23 - 31). This market seems short-term bullish, and we are still anticipating more rallying into September. Nevertheless, if any corrective dip goes too low, the market could turn bearish and we could see a major sell-off with no new September highs. We will keep this in mind as we watch for a corrective low. We are still on the sidelines of this market.
Gold and silver prices are also falling this week, as we expected. Gold's drop has not been as steep as silver's drop, and this could mean that silver is an older medium-term cycle moving to its final corrective bottom (below $18.15). If not, and silver is a newer cycle starting on July 14 (at $18.15), silver prices should stabilize now and start to rally again. Gold is likely a new cycle that started on July 21 (at $1681), so we expect the current correction to be modest. If gold prices continue to fall next week and approach that $1681 low, however, it would mean that gold is also completing an older cycle. We are currently in a reversal zone for these metals that ends next Tuesday. Let's see if we can get a bullish divergence signal early next week (i.e. one metal making a new low without the other). That would give us the confidence to hold our long position in gold and maybe buy some silver. We are currently long in gold and out of silver.
Crude oil prices have been rallying from a low ($85.73 - Sept. contract chart) on Tuesday. That deep low stopped us out of our long position, but the low was in a general reversal zone and may have been the final medium-term cycle bottom. Were we "whipsawed" out of a good trade? Maybe, but we enter another reversal zone next week (Aug. 23 - 31), and technical signals show an ideal cycle bottom could happen between Aug. 18 - Sept. 6, and especially next week (Aug. 22 - 26). Let's wait and see if prices can push lower next week for a final bottom to buy. If not, we may look to buy on any close above $95. We are still on the sidelines of crude oil.