It is looking like a good time to sell short the broad stock market. The DOW, S&P 500 and NASDAQ indices are rising into the center of this week's reversal zone, and while the S&P 500 and NASDAQ are making new yearly highs, the DOW so far has not. This is a classic case of intermarket bearish divergence. There is a good risk/reward ratio here as the stop loss will be if and when the DOW clearly breaks above its all-time Dec. 31st high around 16,590, which is only about 100 points away from the current price. If the market turns down now the correction will probably be short-term, but it could be substantial, possibly bringing the DOW into the 15,800 area or lower. I am going to go short in the broad stock market today.
Crude oil prices have also moved into an ideal position to short sell. Prices are rising steeply into this week's reversal zone and are now encountering resistance in the $95 area. Today's prices nearly touched $95 but then fell sharply back and are closing near the lower end of the day's range, which is bearish behavior. Directional momentum remains nearly 100% bearish indicating the potential for a substantial correction. A good stop loss here would be a clear break above the $95 -$96 area. Going short in crude oil today.
Gold and silver have rebounded after falling a bit earlier in the week and are closing near their weekly highs, which is positive. We need to see more rallying soon, though, to avert the danger of prices falling to new lows. I am currently long in gold but am still being cautious and holding back on buying silver for now.