Today the broad stock market gave us a bearish divergence signal as the NASDAQ made a new all-time high unaccompanied by the S&P 500 and DOW. However, all three indices snapped back up to the top of their day's range after an intraday dip, which is a bullish sign. I am still reluctant to sell short just yet. We are in a reversal zone for the rest of the week (and actually next week too as another reversal zone overlaps our current one - Jan. 27 - Feb. 5). This means there is plenty of time for this market to make new highs before a significant correction down. if the DOW starts closing below 30,750, it may mean the top is in already. Until that happens, let's stay on the sidelines.
Gold and silver are most likely still completing the end of their medium-term cycles. The final bottoms in both cycles are due anytime over the next few weeks, and most likely this week or next. As I wrote in my Jan. 14 post:
"This could be around $1650 - $1750 in gold, and $22 - $25 in silver. If $22 breaks, silver might get down to $20 or even lower."
"Because this correction is likely already underway, we will wait for the cycle bottoms for a potentially good spot to buy. Those bottoms are due sometime over the next several weeks and could easily end up in one or both of two overlapping reversal zones specifically for precious metals coming up Jan.19 - 28 and Jan. 27 -Feb. 5.
We will watch for those target prices in those time frames."
So here we are in that time frame. Neither metal has fallen into those price targets (yet), but they also haven't rallied very much. There is a possibility that gold already started a new medium-term cycle with its low on Nov.30 ($1766) and that silver started a new cycle with last Monday's low at $24.28. If that is the case, both metals should be bullish now (especially silver). But until we see some strong rallying, I'm going to stick with our original bearish view of older cycles still moving towards a final bottom (and buy spot). On the sidelines of both gold and silver for now.
It looks like crude oil may have made a shallow sub-cycle dip and bottom last Friday at $51.44 (March contract chart). If so, prices should rally now into a final top for the current medium-term cycle. That could happen this week and push prices somewhere above $54. This market could be taking cues from the broad stock market which, as I suggested above, could also be pushing higher this week. We will watch for a possible spot to sell short.