The next major reversal zone for the broad stock market begins next week (July 18 - 26), and this sluggish market is still not showing much enthusiasm for either rising or falling into it. For the DOW and S&P 500, their June 29 lows in the last reversal zone were pivot points for a three day rally, but that rally may have topped out on July 3 (also in the reversal zone), and these indices could still fall lower into next week. On the other hand, if these indices can break above those July 3 highs this week (that would be 21,563 in the DOW and 2,439 in the S&P 500) then we could see more rallying into next week. As I have discussed in recent blogs, we are keeping our eyes open for a significant top to sell short as a significant correction (possibly 8-10% or more) is expected soon based on technical and cycle patterns in these charts. Still on the sidelines of the broad stock market.
Gold and silver have now broken below the lows that started their current medium-term cycles (that was $1214 on May 9 for gold and $16.07 on May 9 for silver) which means that their cycles are likely pointed down for at least several more weeks and possibly longer. It is possible for gold prices to get as low as the $1150 area so we will watch for any short-term rallies now to possibly sell short. In the same way gold prices may have been manipulated two weeks go by someone placing a large sell order "by mistake", it appears that a similar situation occurred around 7pm EDT last Thursday after normal market hours when another large sell order was put in for silver that quickly caused the price to briefly plummet from $16 to $14.34. It recovered quickly, but that low around $14 could end up being a significant point in silver's cycle analysis (although it is not showing up on most spot price charts). We will also now watch for any brief bounces in silver's price to possibly sell short for a final cycle bottom that could be as soon as three weeks from now but may also come later in the summer or early fall. Silver's final bottom price will not likely get below that $14 area. On the sidelines of gold and silver for now.
Considering gold and silver's sudden bearish turn, it is not surprising to see the chart of the U.S. Dollar Index looking somewhat bullish. It looks like a baseline of support for the dollar may be developing around 96 from which a rally could start. It may be a difficult climb, however, as there is significant resistance for the dollar all the way up to 100. Nevertheless, even a moderate rally would help push the precious metal prices lower.
Crude oil prices edged lower today so we are still on track to buy a final cycle bottom somewhere within crude's next reversal zone (July 18 - 29). Prices could get to the $40 area, but could also stay above $42. We will wait and see how low they go next week. If prices start to rally and rise into next week's reversal zone, we will consider selling short the top of that rally. Otherwise, we will wait for that bottom to buy. On the sidelines of crude.