I am continuing to watch for signs of a major top in the broad stock market to sell short. The DOW has not been able to rise above its 17,152 high from July 17 and is now falling. If it continues to fall this week it may be headed towards the current cycle bottom, but that bottom may not get below the 16,400 area. This would be a substantial dip but not the 8-15% I am expecting to see shortly. If the DOW does continue down now we could see a bottom to buy in the first week of August for another rally before the big correction. A better scenario would be for the market to edge up higher this week and next week to new highs that could be an ideal point to go short. Another Federal Reserve policy meeting is scheduled this week and U.S. employment reports come out on Friday. If these factors don't spook the market we could see more rallying into next week. Still on the sidelines.
Short-term technical studies of precious metal charts continue to show a strong potential for lower prices before the long-term bullish trend asserts itself. This short-term bearishness is especially obvious in silver charts right now so it seems likely this metal will correct down some more. Some analysts feel that gold and silver prices have been forming a baseline over the last several days and are about to break to the upside. While this is possible, directional momentum remains mixed bullish and bearish in both metals and, as stated above, other technical signals are bearish. An ideal scenario now would be for gold and/or silver to form a new bottom in the first week of August while the broad stock market makes a new top. That would be a good signal to buy gold and sell the stock market. On the sidelines and waiting to buy.
Like the broad stock market, crude oil prices have been coming down a bit but seem reluctant to take a deep plunge. If crude can muster a rally into the end of this week to $104 or higher, we might have an ideal spot to sell short. Out of this market for now.