The broad stock market rallied in the first half of this week, but the rally didn't get very far and the market is now turning down and erasing most of that gain. Last Friday was near the center point of our recent reversal zone (which extended into early this week) so that was likely the turning point for the reversal. The next strong reversal zone centers around May 28 (plus or minus a few days on either side). If the DOW and S&P 500 break below last Friday's lows (17,580 in the DOW and 2,039 in the S&P 500) then we could see them fall for another week or two into that next reversal zone. If that happens we will look to buy. If last Friday's lows hold, however, we could instead see more rallying into the end of the month, and we would be back on track to sell short from a top (which may or may not make a new high for the year). We should keep in mind that the Federal Reserve (and others) most likely want to keep the stock markets buoyant into the presidential election later this year; however, this week's lackluster rally is suggesting that these markets need to take some sort of correction soon. Still on the sidelines of the broad stock market..
Gold and silver prices have been mostly down this week. This market is still giving us mixed signals, but it may be setting up for a strong rally shortly. As I mentioned in my last blog, the longer-term picture for these metals seems to be turning bullish. I will analyze this more carefully over the week-end. Still out of both gold and silver.
From a low of $43 (June contract chart) on Tuesday, crude oil prices reversed up and made a new high yesterday at $47. Because we are looking to buy near $41 or sell near $50, we are still on the sidelines of this market. Directional momentum in this market is currently 100% bullish so we may see prices edge up towards that $50 mark over the next two weeks into another reversal zone at the end of the month. Yesterday's high was technically still within this week's reversal zone, however, so it is also possible for prices to reverse again and fall into the end of the month towards our $41 target. Technical data currently supports the idea of more rallying so we will wait on the sidelines for a price closer to $50 and look to sell short if technical signals support a correction.