MARKETS UPDATE (11:30 pm EDT)
The broad stock market seems persistent in its desire to rally as all three indices (DOW, S&P 500, NASDAQ) made more gains today and even closed back above their 15-day moving averages (although they still remain below their 45-day moving averages). We note, however, that while the S&P 500 and NASDAQ made new weekly highs today, the DOW did not, and this gives us a case of intermarket bearish divergence. Is it possible these indices made their final medium-term cycle bottoms on April 19 (S&P 500 and NASDAQ) and April 17 (DOW)? Well, maybe; but those bottoms were not in any reversal zone or "pivot point" area which we like to see at any major turning point. And there's still time for this market to fall lower inside our current strong reversal zone which ends on Friday. Let's stay on the sidelines for now with the idea of a lower low by Friday. We note that even if the final cycle bottoms are in, the market is rallying into our current reversal zone, and that could turn any new cycles bearish very quickly.
Both gold and silver made isolated lows last Tuesday, but the rally from those lows has been very tepid as both metals seem reluctant to rise above their 15-day moving average. Last Tuesday's lows could have been significant sub-cycle lows as they happened two days inside a reversal zone specifically for the precious metals, but prices need to rally strongly now to confirm that scenario. I think it's more likely prices will fall lower into the second half of this reversal zone which ends this Friday. Let's stay on the sidelines for now as we wait for that to happen. If we don't get new lows by the end of the week, we will have to assume the sub-cycle bottoms are in.
Crude oil prices made an isolated low last week on Monday ($80.70 - June contract chart) that was on the first day of our general reversal zone as well as the first day of a reversal zone specifically for crude (April 22 - May 3). Technically, that could qualify as a final medium-term cycle low, but the short rally from that low into last Friday is now turning down just under the 15-day moving average. As with our other markets, we could easily see lower prices into the end of this week for a better medium-term cycle bottom under the 45-day moving average. Let's remain on the sidelines of this market as we wait to see if a deeper correction is forthcoming.
The broad stock market seems persistent in its desire to rally as all three indices (DOW, S&P 500, NASDAQ) made more gains today and even closed back above their 15-day moving averages (although they still remain below their 45-day moving averages). We note, however, that while the S&P 500 and NASDAQ made new weekly highs today, the DOW did not, and this gives us a case of intermarket bearish divergence. Is it possible these indices made their final medium-term cycle bottoms on April 19 (S&P 500 and NASDAQ) and April 17 (DOW)? Well, maybe; but those bottoms were not in any reversal zone or "pivot point" area which we like to see at any major turning point. And there's still time for this market to fall lower inside our current strong reversal zone which ends on Friday. Let's stay on the sidelines for now with the idea of a lower low by Friday. We note that even if the final cycle bottoms are in, the market is rallying into our current reversal zone, and that could turn any new cycles bearish very quickly.
Both gold and silver made isolated lows last Tuesday, but the rally from those lows has been very tepid as both metals seem reluctant to rise above their 15-day moving average. Last Tuesday's lows could have been significant sub-cycle lows as they happened two days inside a reversal zone specifically for the precious metals, but prices need to rally strongly now to confirm that scenario. I think it's more likely prices will fall lower into the second half of this reversal zone which ends this Friday. Let's stay on the sidelines for now as we wait for that to happen. If we don't get new lows by the end of the week, we will have to assume the sub-cycle bottoms are in.
Crude oil prices made an isolated low last week on Monday ($80.70 - June contract chart) that was on the first day of our general reversal zone as well as the first day of a reversal zone specifically for crude (April 22 - May 3). Technically, that could qualify as a final medium-term cycle low, but the short rally from that low into last Friday is now turning down just under the 15-day moving average. As with our other markets, we could easily see lower prices into the end of this week for a better medium-term cycle bottom under the 45-day moving average. Let's remain on the sidelines of this market as we wait to see if a deeper correction is forthcoming.
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