The precious metals market continues to be frustratingly ambiguous as it is presenting us with lots of mixed signals and the potential for a strong move in either direction. As I mentioned last week, it's possible that one or both metals started a new medium-term cycle in early March, but there was no bullish divergence between the two which is something we like to see at the start of a new cycle. This week's reversal zone (April 9 - 17) would be ideal for a cycle bottom (and start of a new one) in either metal, and ideally for one and not the other which would give us our bullish divergence signal. Of course, we don't always get our ideal scenario, and today's early day price upswing in both gold and silver may be telling us that new cycles have already started. At the moment (late afternoon), however, prices are backing down from their early highs, and even if they push higher tomorrow, we will be entering that reversal zone, and I am not comfortable going long with new highs in a reversal period. If we do get a strong rally here, we probably won't need to wait long for a corrective dip and an opportunity to still buy early in the cycle. Ideally, of course, we would like to see a new low this week or early next in either gold or silver, but not both for an even better spot to buy. Let's stay on the sidelines for now.
The broad stock market took a small dip early today, but seems to be recovering near the end of the day's trading. It still looks like we are on track for new highs in this week's reversal zone (which starts tomorrow). NOTE: Today the S&P 500 and NASDAQ are closing with new weekly highs while the DOW failed to make a new high. This is bearish divergence. Although we are technically one day out of the reversal zone, we could be seeing an early top here. If the DOW fails to make a new high tomorrow (i.e. break above 26,487), we will consider selling this market short as the medium-term cycle high may be in. Stay tuned. On the sidelines.
Crude oil prices are pushing higher today as we enter this week's reversal zone (tomorrow). Today's high was $64.48 (May contract chart). If prices push higher over the next several days and stay below $66, we may consider short selling crude as we could be seeing a medium-term cycle high forming. Otherwise, we will wait for a corrective dip to buy. Still out out crude oil.