The broad stock market continues to fall steeply even as we near the end of the current reversal zone for equities on Tuesday (June 26). Today directional momentum in all three market indices (DOW, S&P 500, and NASDAQ) changed from mixed bullish and bearish to nearly 100% bearish. This is not a good sign for equities and may indicate a serious correction is underway. This market is being spooked by President Trump's ongoing "trade war" policies which are not likely to be going away any time soon. Even if this market's trend is turning bearish, however, we are still near the end of the current medium-term cycle (at least for the S&P 500 and NASDAQ) and in a strong reversal zone so we could see a bottom here and some sort of rally to follow. A good target for a bottom would be around 2,680 in the S&P 500. The DOW could fall as low as 23,500. Any new lows after Tuesday could mean trouble for this market and would keep us on the sidelines. On the other hand, if one or two (but not all three) market indices make new lows for the year, we could have a strong bullish divergence signal to buy. Still on the sidelines.
The reversal zone for precious metals ends on Wednesday. Gold and silver need to start rallying soon if this reversal is going to be valid. Both metals (especially silver) seem to be holding up but are still in danger of breaking support levels that we don't want to see breached ($1264 in gold and $16.06 in silver). Lower prices after Wednesday would also be a bearish sign. A bullish divergence signal from last week is still in effect until silver breaks below $16.06. We are out of silver but still holding our long position in gold.
Our crude oil long positions are looking good. The low at $63.40 (August contract chart) on June 18 appears to be the start of a new medium-term cycle in crude. Directional momentum in crude's chart is now 100% bullish so we should at least see a rally to test the last cycle high of $72.70 on May 22. How high this rally goes will determine the longer-term trend in crude. Holding my long position in crude oil.