The broad stock market continues to plunge lower today which confirms that we are now headed toward the final bottoms of the current medium-term cycles in the DOW and S&P 500. Now through next Monday is a reversal zone for equities so it is highly likely to see that bottom in this time frame. A good price target for a normal cycle bottom would be 24,500 - 25,000 in the DOW and 2,650 - 2,700 in the S&P 500. We are at those levels now, but this is a very nervous market that has had the rug pulled out from under it very suddenly. If panic sets in, there is the possibility of a more serious selloff that could take the bottom of these cycles to levels much lower than the "normal" ones just mentioned. I don't think that is going to happen, but it is a possibility. The DOW breaking and closing below 24,500 would be a warning sign. For now, let's stick with the idea of buying a bottom this week near those ranges stated above and watch for other short-term technical signals to buy. On the sidelines of the broad stock market and looking to buy soon as long as the DOW stays above 24,500.
Last Thursday it looked like the U.S. Dollar Index had breached its support at 89 and was breaking down again, but it was back above 89 on Friday, and today it appears to be mounting another assault at the 90 - 91 line of resistance (formerly support) it broke down from in January. As I have discussed in recent blogs, the U.S. dollar may be starting a serious long-term correction down if it can't get back above 91 soon. Right now it appears the dollar could test that resistance, and in the process send the price of precious metals lower.
We are still waiting to buy gold and silver. This week could also be a reversal zone for these metals so we are still watching for gold to move closer to our $1300 target. Last week silver plunged below our $16.80 target and appears to be headed closer to our secondary target near $16. Calling short-term movements in this market is a bit difficult right now, but today's dollar rally is suggesting that gold and silver prices could move lower. On the sidelines for now but waiting to buy soon.
This week is also a significant reversal zone for crude oil, and prices are resuming their fall to a significant sub-cycle correction after failing to make a new high last week. We may look to buy this week. This correction could get as low as $59 (March contract chart), but we don't want to see it close below $58 as that may alter our current bullish view of this market. Still on the sidelines of crude oil.