MARKETS UPDATE (11:00 pm EDT)
Yesterday all three broad stock market indices (DOW, S&P 500, NASDAQ) made new all-time highs which negates any recent intermarket bearish divergence signals. This pretty much confirms that we are in a new medium-term cycle that started with the April 17 low in the DOW (37,611) and the April 19 lows in the S&P 500 and NASDAQ (4,953 and 15,223, respectively). The early phase of a new cycle is usually bullish. Nevertheless, these new highs are happening inside a strong general reversal zone (May 13 - 25), so a correction down could be imminent (unless this reversal zone coincides with a "breakout" instead of a normal reversal - less likely, but possible). Either way, now is not the time to buy, so we will remain on the sidelines of this market for now.
We took profits in our long gold and silver positions early yesterday. That turned out to be a little too early as both metal prices took off today (especially silver). We did make a good profit with our silver trade and a small one on gold, but today silver jumped from $29.6 to $31.4 causing us to regret not holding it a bit longer. We note, however, that silver's surge broke above its previous high from April 12 ($29.68), but gold's rally did not exceed its April 12 high ($2427) creating a bearish divergence signal inside our strong reversal zone. As with the broad stock market, a correction down could be imminent. If it happens, we may be looking to re-enter our long position in one or both metals. For now, we are out of both markets.
Crude oil's final medium-term cycle bottom could have happened with Wednesday's low at $76.70. Today prices closed at $80.06, just above the 15-day moving average (but still below the 45-day moving average around $81.76 and rising), and that supports the idea that a new cycle has started. But we note that this high is happening in the center of our general reversal zone. If prices turn back down before breaking above the 45-day moving average, we could see a low below $76.70 next week that could end up inside our next reversal zone specific to crude oil (May 22 - 31). That might be a better candidate for a final medium-term cycle bottom. Even if a new cycle began on Wednesday (May 15), we are rallying and making new highs inside this week's and next week's general reversal zone and potentially inside the reversal zone for crude that starts next Wednesday and continues into the end of the month. This makes me reluctant to buy until we see another significant correction. Let's stay on the sidelines of crude for now.
Yesterday all three broad stock market indices (DOW, S&P 500, NASDAQ) made new all-time highs which negates any recent intermarket bearish divergence signals. This pretty much confirms that we are in a new medium-term cycle that started with the April 17 low in the DOW (37,611) and the April 19 lows in the S&P 500 and NASDAQ (4,953 and 15,223, respectively). The early phase of a new cycle is usually bullish. Nevertheless, these new highs are happening inside a strong general reversal zone (May 13 - 25), so a correction down could be imminent (unless this reversal zone coincides with a "breakout" instead of a normal reversal - less likely, but possible). Either way, now is not the time to buy, so we will remain on the sidelines of this market for now.
We took profits in our long gold and silver positions early yesterday. That turned out to be a little too early as both metal prices took off today (especially silver). We did make a good profit with our silver trade and a small one on gold, but today silver jumped from $29.6 to $31.4 causing us to regret not holding it a bit longer. We note, however, that silver's surge broke above its previous high from April 12 ($29.68), but gold's rally did not exceed its April 12 high ($2427) creating a bearish divergence signal inside our strong reversal zone. As with the broad stock market, a correction down could be imminent. If it happens, we may be looking to re-enter our long position in one or both metals. For now, we are out of both markets.
Crude oil's final medium-term cycle bottom could have happened with Wednesday's low at $76.70. Today prices closed at $80.06, just above the 15-day moving average (but still below the 45-day moving average around $81.76 and rising), and that supports the idea that a new cycle has started. But we note that this high is happening in the center of our general reversal zone. If prices turn back down before breaking above the 45-day moving average, we could see a low below $76.70 next week that could end up inside our next reversal zone specific to crude oil (May 22 - 31). That might be a better candidate for a final medium-term cycle bottom. Even if a new cycle began on Wednesday (May 15), we are rallying and making new highs inside this week's and next week's general reversal zone and potentially inside the reversal zone for crude that starts next Wednesday and continues into the end of the month. This makes me reluctant to buy until we see another significant correction. Let's stay on the sidelines of crude for now.
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