It still looks likely that the broad stock market indices (DOW, S&P 500, NASDAQ) started new medium-term cycles with their lows on June 16-17, but we can't yet abandon the possibility that they are older cycles getting ready to move down to their final cycle bottoms (especially the NASDAQ). This market rallied last week, but only the NASDAQ made a new weekly high on Friday which created a bearish divergence signal (and negated the bullish divergence signal from earlier in the week). Not surprisingly, the market moved down today, but it is still not clear if this market wants to be bullish or bearish. Even If these are new, young medium-term cycles, they could turn bearish and top out over the next week or two (or they may have topped out already - the DOW and S&P 500 with their highs on June 28 and the NASDAQ with its high on Friday). To be bullish, all three would now have to break above those highs (31,885 in the DOW, 3,945 in the S&P 500, and 11,690 in the NASDAQ). Because the short-term trend is still not clear, we will remain on the sidelines of this market for now.
As with the broad stock market right now, gold and silver's medium-term cycles could be new or old. but in both cases they are looking bearish. Because of this, we are looking to sell short the top of any short-term relief rallies. We won't be looking to buy until we are sure the current medium-term cycles have reached their final corrective bottoms. That might happen in early August. Once gold makes its final medium-term cycle bottom, we could get a significant rally, but that rally most likely will not exceed gold's all-time high of $2070 as that top was most likely the final top to the long-term 23 year cycle in gold that is due to bottom in 2023 -2024 close to $1000. So even though we may look to buy at the bottom of the current medium-term cycle for a strong but short-term rally, we will be ready to switch positions at the top of that rally and go short for a final plunge to the long-term cycle bottom. But I am getting ahead of myself here. For now, we will remain on the sidelines of both metals. We may look to sell short in gold again if prices can rally back up to the $1785 area.
The U.S. Dollar Index is looking VERY bullish and today broke to a new high just above 108. Even though the dollar's cycle and trend are bullish, the greenback has been rising steeply and is entitled to take a breather and corrective dip anytime now. That could take some downward pressure off precious metal prices and give us the bounce in gold and silver we are looking for. We will watch for that.
Last Tuesday we were stopped out of our long position in crude oil with a small loss as prices plummeted below $99 (Aug. contract chart). They have snapped back sharply from there; however, last week's sharp drop may have turned the current medium-term cycle bearish. That cycle is getting old and could be due to bottom sometime in August. In the meantime, we may see prices trading in a range defined by last week's low ($95) and $115. If prices can hold above $95 and then break and close above $115, we could be back on track for a bullish run to the $145 - $150 area. But a break below $95 would be a bearish sign that could negate that idea. For now, we will remain on the sidelines of crude.