MARKETS UPDATE (11:30 pm EDT)
Last week the S&P 500 and NASDAQ both made new all-time highs while the DOW remained well below its all-time high from May 20 (40,077). Thus our strong bearish divergence signal is persisting (and will be influential until the DOW's all-time high is exceeded). We're in the dead center of a strong reversal zone for all markets that ends this Friday, so we could see a sharp correction down any day now. The lack of a new all-time high in the DOW suggests that the overall trend of this current medium-term cycle could be turning bearish, but we can't be certain of that just yet. We are staying on the sidelines of the broad stock market for now as we wait to see the extent of any corrective drop that could be imminent.
Gold and silver prices have been very stagnant recently and seem reluctant to rally. Both metals made isolated lows last Wednesday, which was the first day of our current reversal zone. Those lows could represent the start of new medium-term cycles in both gold and silver, but if they were, a strong rally should be imminent, and prices need to start closing above the 15-day and 45-day moving averages. Because we are in the reversal zone through Friday, we could see a lower low in one or both metals over the next several days which would reinforce the idea of starting new cycles. As long as prices don't go too low, that might be preferable to a strong rally into the end of the week, as the latter scenario would be a set-up for another sharp correction down. We are still holding our long position in gold and staying on the sidelines of silver for now.
Crude oil made another new weekly high today ($83.64 - Aug. contract chart), but we are in the center of a strong reversal zone, so a sharp correction down could happen any day now. It is early in a new medium-term cycle in this market, and the trend looks quite bullish. We will therefore be looking to buy the low of any significant correction. We are currently on the sidelines of crude oil.
Last week the S&P 500 and NASDAQ both made new all-time highs while the DOW remained well below its all-time high from May 20 (40,077). Thus our strong bearish divergence signal is persisting (and will be influential until the DOW's all-time high is exceeded). We're in the dead center of a strong reversal zone for all markets that ends this Friday, so we could see a sharp correction down any day now. The lack of a new all-time high in the DOW suggests that the overall trend of this current medium-term cycle could be turning bearish, but we can't be certain of that just yet. We are staying on the sidelines of the broad stock market for now as we wait to see the extent of any corrective drop that could be imminent.
Gold and silver prices have been very stagnant recently and seem reluctant to rally. Both metals made isolated lows last Wednesday, which was the first day of our current reversal zone. Those lows could represent the start of new medium-term cycles in both gold and silver, but if they were, a strong rally should be imminent, and prices need to start closing above the 15-day and 45-day moving averages. Because we are in the reversal zone through Friday, we could see a lower low in one or both metals over the next several days which would reinforce the idea of starting new cycles. As long as prices don't go too low, that might be preferable to a strong rally into the end of the week, as the latter scenario would be a set-up for another sharp correction down. We are still holding our long position in gold and staying on the sidelines of silver for now.
Crude oil made another new weekly high today ($83.64 - Aug. contract chart), but we are in the center of a strong reversal zone, so a sharp correction down could happen any day now. It is early in a new medium-term cycle in this market, and the trend looks quite bullish. We will therefore be looking to buy the low of any significant correction. We are currently on the sidelines of crude oil.
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