I am going to be traveling later this afternoon and will not be able to post a blog. This update should be sufficient until I post another sometime during the weekend.
The DOW broke above its April high (24,879) by just 10 points earlier this morning but then started to fall steeply. At the time of this writing (2:00 pm EST) it is back down near its opening price around 24,775. Our bearish divergence signal has been negated, but we are still at the center of a strong reversal zone so some sort of pullback can happen.
If the market closes significantly down from its morning highs, that will also be a bearish signal. For these reasons, I am going to hold my short position for now. Any traders that were stopped out should remain on the sidelines. If this market rallies back up over the next two hours and the DOW looks like it will close the week above that 24,879 high then traders can cover (unload) their short positions. Otherwise, I am going to wait until the weekend to make any trading decisions.
Gold and silver also negated a bearish divergence set-up as gold made a new weekly high this morning (silver did this yesterday). Nevertheless, like the broad stock market, both metals seem to be closing in the lower part of today's range which is a bearish sign, and it is happening in the center of a reversal zone. Some sort of correction could follow. Let's stay on the sidelines of gold and silver for now.
Crude oil prices are down a bit after hitting a new high of $71.89 yesterday (June 2018 contract chart). That high may have been a top, but the current reversal zone extends into next Wednesday so there is still time for crude to push higher into our ideal target range of $72 - $75. We may sell short on Sunday or early next week. Staying on the sidelines for now.