The broad stock market is looking amazingly bullish and is continuing its strong rally driven by money printing from the Fed. On Friday last week the NASDAQ made a new all-time high surpassing its previous high of 9,838 earlier this year on February 19. The DOW and S&P 500, however, remain below their Feb. all-time highs. This gives us a strong intermarket bearish divergence signal (until those highs are exceeded in both the DOW and S&P 500), and it is happening as we enter our new wide reversal zone (June 8 - 30). What this means is that we could see a top any time now and a sharp downturn. If that happens, we could see a deep correction into the end of the month to a final medium-term cycle bottom that would be a good spot to buy.
But this market seems very bullish now. In fact, it may be rising parabolically (which opens up the possibility of a parabolic "blow-off", especially if the DOW and S&P make new all-time highs). Instead of falling, I think it's more likely this rally will continue into the mid-point of this new reversal zone around June 19-22 where we may see a final top in the current medium-term cycle. This will be an especially good place to sell short if either the DOW or S&P 500 (or both) are still below their all-time highs. That top would be followed by a deep correction into the final cycle bottom sometime in July. Based on all of the above, our strategy now will be to wait for either a top to sell short or a bottom to buy in that June 19-22 time frame. We will stay on the sidelines of the broad stock market for now.
Gold and silver are giving us LOTS of mixed signals right now. Gold broke and closed below a support line around $1700 on Friday last week. Friday's low was at $1672. If that low breaks this week, prices could continue lower for another week or two. But there's a chance that gold will rally strongly from that low (or from a slightly lower low this week). It could go either way based on mixed technical signals now. Today and tomorrow are the last two days of a reversal zone specifically for precious metals (and the first two days of a very general and broad reversal zone for ALL markets - June 8 - 30). It's a good time for gold to turn up from a bottom.
Silver also made a low on Friday and could be ready to turn up here. But as with gold, there's a chance prices could continue lower into a final medium-term cycle bottom over the next few weeks. There are technical signals supporting both ideas. It's just too risky to trade at the moment. Ideally, I would like to see prices move lower over the next week or two for a final cycle bottom to buy in both metals. If we get a strong rally first, we may have to wait a bit longer for those cycle bottoms. A strong rally into this new reversal zone could also give us a good shorting opportunity for the final correction into the cycle bottoms. We will remain on the sidelines for now.
Crude oil prices are edging higher into our target range of $40 - $45. We enter a reversal zone specifically for crude tomorrow (June 9 - 17). We may see a sub-cycle top soon and some sort of correction. If prices dip into the $34 - $37 area, I may consider buying as it is still early in this new medium-term cycle and this market could be taking bullish cues from the broad stock market. Out of crude oil for now.