All three broad stock market indices (DOW, S&P 500, NASDAQ) made new record highs last Friday fulfilling our "Santa Claus" rally speculation earlier this month. But can the bullish holiday spirit carry into New Year's Day (Wednesday)? Today's bearish drop in equities is suggesting that answer is no, but we can't be certain. We leave our current reversal zone today, but there is another stronger one coming up next week (Jan. 7 - 16). If this market doesn't roll over now, it's possible it could edge higher into that time window for a final top. If equities do roll over here (from Friday's highs), we may instead see a final cycle bottom in that same time frame (that would be an excellent buy spot). We usually like to see bearish divergence (one or two but not all three indices make a new high) at a significant top, but we didn't get that last week which is why I'm questioning Friday's top. Let's stay on the sidelines for now. Our current trading goal is to buy the final corrective bottom of the current medium-term cycle which is due any time now. We are expecting this market to stay bullish into the early part of this new year.
Gold prices made a new weekly high today while silver prices did not for a case of bearish divergence in the precious metals market. We have been waiting for some sort of pullback in gold and silver to buy, and because today is still in a reversal zone, it could start now. If it doesn't (and silver makes a new high this week) we may have to wait for that Jan. 7 - 16 time frame for a final top and then a reversal. The general picture for both gold and silver is quite bullish right now so we are looking to go long soon. Still on the sidelines of this market.
Crude oil today also pushed up to a new weekly high ($62.34 - Feb. contract chart). Our target for a top is in the $61 - $63 range so today's high could be it. Let's wait for a corrective dip and see how low it goes. We will probably be looking to buy the bottom of that dip which is due any time over the next few weeks. On the sidelines of crude oil for now.