MARKETS UPDATE (5:00 pm EDST)
This week the DOW made a new low on Monday, rallied on Tuesday, and then made a deeper low (31,430) on Wednesday well into our target range for a medium-term cycle bottom. The S&P 500 also made a deep new low on Monday at 3,809 well inside our target range for a cycle bottom. Those Wednesday and Monday lows are holding today (even as the broad stock market falls a bit) and they could be the final cycle bottoms. We note, however, that our current strong reversal zone (March 13 - 23) continues through the end of next week, so there is still time for these indices to push lower. One sign that the bottom is in would be a close above the 15-day moving average. The DOW is a bit below there right now, but the S&P 500 tested its 15-day moving average yesterday and today and is encountering some resistance. We are looking to go long at the final bottom of these medium-term cycles, but let's wait and see how these indices move into next week. Ideally, we would like to see one make a new low next week without the other which would give us a nice bullish divergence signal to buy. We will stay on the sidelines of this market for now.
Gold prices have been rising steeply, which reinforces our labeling of the Feb. 28 low at $1811 as the start of a new medium-term cycle. Prices have easily pushed through a resistance zone around $1915 - $1920 and today are testing and exceeding the high of the previous medium-term cycle ($1959). This bullishness may come to an end shortly, however, as we are now in the dead center of two strong reversal zones, and one of them is specifically for the precious metals (these reversal zones end next week on Wednesday). This means a top and strong reversal back down could be imminent.
The next resistance area for gold is around $2000. I don't expect that price to be exceeded, but if that does happen after next Wednesday, we might have to abandon the bearish scenario of gold falling to a final long-term 23-year cycle bottom due this year or next possibly as low as $1000. If prices break above the all-time high of $2070, we will have to shift to the idea that a new 23-year cycle already started with the double-bottom lows of $1616 on Sept. 28, 2022 and $1617 on Nov. 11, 2022. I still favor the bearish scenario at the moment, but if the bullish one pans out (pun intended with gold), it would mean that gold is VERY bullish, and prices would be pointed up and rising steeply for many more years.
For now, until proven otherwise, we will stick to the idea that this current rally is probably the "last hurrah" for gold before it falls steeply to the final bottom of an older 23-year cycle due by next year near prices possibly approaching $1000. That means we are still watching for a good spot to sell short. Because gold is now making a new yearly high while silver is well below its highs from January, we have a strong intermarket bearish divergence signal in effect. Let's wait until early next week for a few more technical "sell" signals. We are still on the sidelines of gold.
Silver prices also rallied strongly today and managed to close above the 45-day moving average. Nevertheless, as with gold, this new high is happening in the center of strong reversal zones with bearish divergence to gold, so a downturn could be imminent. Silver's new medium-term cycle likely began with the low of $19.91 on March 10 and is only one week old. Unlike gold, it is too early for a top in its new cycle, so any correction down should stay above that low. If a deeper low does form early next week (highly unlikely), we would probably relabel the new cycle starting from that low and consider it a good spot to buy. Alternatively, we may look to buy any corrective dip that stays above $19.91 (or perhaps makes a double-bottom to it). The bottom line here is that the start of a new medium-term cycle in silver is overdue (if it didn't already happen on March 10), and we can expect at LEAST a two week rally to follow. If the new cycle is bullish, prices could go as high as $26 - $29. But if it turns out to be bearish, silver may not get past $23 after a MINIMUM 2 week rally (this is only week 1). Based on all this, we will look to buy silver on any significant corrective drop next week. If prices stay elevated past Wednesday, it could indicate a "break-out" is happening instead of a reversal. In that situation we would stay on the sidelines and wait for a corrective drop to buy. For now, we remain on the sidelines of silver.
Crude oil prices edged a bit lower today and nearly touched $65 (April contract chart). As I stated in yesterday's blog, we are now in the center of a strong reversal zone, so some sort of bottom and reversal back up could be imminent. This reversal zone lasts through the end of next week. If prices can fall into our $60 - $65 target range for a medium-term cycle bottom, we might see that final bottom next week. However, the final bottom is more likely to happen in mid-April, which would be a more normal length for the medium-term cycle in crude. Let's stay on the sidelines of crude for now and watch where prices go next week.
This week the DOW made a new low on Monday, rallied on Tuesday, and then made a deeper low (31,430) on Wednesday well into our target range for a medium-term cycle bottom. The S&P 500 also made a deep new low on Monday at 3,809 well inside our target range for a cycle bottom. Those Wednesday and Monday lows are holding today (even as the broad stock market falls a bit) and they could be the final cycle bottoms. We note, however, that our current strong reversal zone (March 13 - 23) continues through the end of next week, so there is still time for these indices to push lower. One sign that the bottom is in would be a close above the 15-day moving average. The DOW is a bit below there right now, but the S&P 500 tested its 15-day moving average yesterday and today and is encountering some resistance. We are looking to go long at the final bottom of these medium-term cycles, but let's wait and see how these indices move into next week. Ideally, we would like to see one make a new low next week without the other which would give us a nice bullish divergence signal to buy. We will stay on the sidelines of this market for now.
Gold prices have been rising steeply, which reinforces our labeling of the Feb. 28 low at $1811 as the start of a new medium-term cycle. Prices have easily pushed through a resistance zone around $1915 - $1920 and today are testing and exceeding the high of the previous medium-term cycle ($1959). This bullishness may come to an end shortly, however, as we are now in the dead center of two strong reversal zones, and one of them is specifically for the precious metals (these reversal zones end next week on Wednesday). This means a top and strong reversal back down could be imminent.
The next resistance area for gold is around $2000. I don't expect that price to be exceeded, but if that does happen after next Wednesday, we might have to abandon the bearish scenario of gold falling to a final long-term 23-year cycle bottom due this year or next possibly as low as $1000. If prices break above the all-time high of $2070, we will have to shift to the idea that a new 23-year cycle already started with the double-bottom lows of $1616 on Sept. 28, 2022 and $1617 on Nov. 11, 2022. I still favor the bearish scenario at the moment, but if the bullish one pans out (pun intended with gold), it would mean that gold is VERY bullish, and prices would be pointed up and rising steeply for many more years.
For now, until proven otherwise, we will stick to the idea that this current rally is probably the "last hurrah" for gold before it falls steeply to the final bottom of an older 23-year cycle due by next year near prices possibly approaching $1000. That means we are still watching for a good spot to sell short. Because gold is now making a new yearly high while silver is well below its highs from January, we have a strong intermarket bearish divergence signal in effect. Let's wait until early next week for a few more technical "sell" signals. We are still on the sidelines of gold.
Silver prices also rallied strongly today and managed to close above the 45-day moving average. Nevertheless, as with gold, this new high is happening in the center of strong reversal zones with bearish divergence to gold, so a downturn could be imminent. Silver's new medium-term cycle likely began with the low of $19.91 on March 10 and is only one week old. Unlike gold, it is too early for a top in its new cycle, so any correction down should stay above that low. If a deeper low does form early next week (highly unlikely), we would probably relabel the new cycle starting from that low and consider it a good spot to buy. Alternatively, we may look to buy any corrective dip that stays above $19.91 (or perhaps makes a double-bottom to it). The bottom line here is that the start of a new medium-term cycle in silver is overdue (if it didn't already happen on March 10), and we can expect at LEAST a two week rally to follow. If the new cycle is bullish, prices could go as high as $26 - $29. But if it turns out to be bearish, silver may not get past $23 after a MINIMUM 2 week rally (this is only week 1). Based on all this, we will look to buy silver on any significant corrective drop next week. If prices stay elevated past Wednesday, it could indicate a "break-out" is happening instead of a reversal. In that situation we would stay on the sidelines and wait for a corrective drop to buy. For now, we remain on the sidelines of silver.
Crude oil prices edged a bit lower today and nearly touched $65 (April contract chart). As I stated in yesterday's blog, we are now in the center of a strong reversal zone, so some sort of bottom and reversal back up could be imminent. This reversal zone lasts through the end of next week. If prices can fall into our $60 - $65 target range for a medium-term cycle bottom, we might see that final bottom next week. However, the final bottom is more likely to happen in mid-April, which would be a more normal length for the medium-term cycle in crude. Let's stay on the sidelines of crude for now and watch where prices go next week.
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