MARKETS UPDATE (11:30 pm EDST)
We had been waiting for a rally in gold and silver prices into the recent reversal zone for precious metals (May 27 - June 6). We did get one in both metals, but it fell well short of our targets ($1900 in gold and $24 in silver). Gold hit $1873 last Friday, and silver reached $22.48 today. Gold did not make a new high today while silver did, and both closed in the lower part of their day's range. This gave us a strong intermarket bearish divergence signal in the last day of our reversal zone. This is why I gave a trade alert to sell both metals short (see post below). Our stop loss for both trades can be based on both closing above their recent highs ($1874 in gold and $22.49 in silver).
Our preferred labeling for both metals is that they are older medium-term cycles that have turned bearish and are headed lower to their final cycle bottoms due over the next month or two. If we get a strong rally that breaks above those highs just mentioned, we may have to relabel the cycles. But for now, we are bearish. There's still a small chance that gold could rally and challenge it's all-time high of $2070, but that possibility is looking much less likely now. It's more likely that gold's long-term 15-16 year cycle has peaked and is now correcting down to it's long-term cycle bottom due in 2023-2024 around $1000.
It's still not clear if the broad stock market is now going to correct down to a sub-cycle low or continue to rally. We are out of our strong reversal zone (May 26 - June 3), and all three of our stock market indices (DOW, S&P 500, NASDAQ) made new highs last week (in that time frame). These indices should fall now if this reversal is going to be effective. This is my preference, but sometimes "reversal" zones can correspond to break-outs if the market is very bullish. A rally to new highs from here would confirm that is happening. If this market does move higher, Friday (plus or minus a few trading days) could be another potential reversal point (a weak one). We will stay on the sidelines as we watch how this market moves over the next several days.
It appears that the U.S. Dollar Index made its final medium-term cycle bottom last Monday at 101.30.This means we have started a new cycle, and new cycles usually start off bullish. This reinforces the idea that the precious metals will move down now, at least short-term. The big question is whether or not the greenback can rise above its previous high of 105 on May 13. That will determine if the dollar is going to turn longer-term bullish or continue lower into a final 15-16 year bottom (due in 2023-2025 in the 50-55 range). We shouldn't have to wait long to see that question answered.
Crude oil is most likely in the eighth week of a medium-term cycle that began with the low of $92.14 on April 11 (July contract chart). It made its first sub-cycle low on May 19 at $103.24. This cycle has been very bullish, and this second sub-cycle is now rallying strongly to its top which could be anytime within the next 1 to 4 weeks. Because prices have now cleared significant resistance at $115, we could see more rallying from here. Two weeks from now we enter another reversal zone specifically for crude (June 20 - 28). This would be an ideal time frame for a top. As I've said in previous blogs, this market is highly volatile at this time due to the ongoing Russia/Ukraine war, and I am not comfortable chasing this rally until it makes a significant correction. We will remain on the sidelines of crude for now.
We had been waiting for a rally in gold and silver prices into the recent reversal zone for precious metals (May 27 - June 6). We did get one in both metals, but it fell well short of our targets ($1900 in gold and $24 in silver). Gold hit $1873 last Friday, and silver reached $22.48 today. Gold did not make a new high today while silver did, and both closed in the lower part of their day's range. This gave us a strong intermarket bearish divergence signal in the last day of our reversal zone. This is why I gave a trade alert to sell both metals short (see post below). Our stop loss for both trades can be based on both closing above their recent highs ($1874 in gold and $22.49 in silver).
Our preferred labeling for both metals is that they are older medium-term cycles that have turned bearish and are headed lower to their final cycle bottoms due over the next month or two. If we get a strong rally that breaks above those highs just mentioned, we may have to relabel the cycles. But for now, we are bearish. There's still a small chance that gold could rally and challenge it's all-time high of $2070, but that possibility is looking much less likely now. It's more likely that gold's long-term 15-16 year cycle has peaked and is now correcting down to it's long-term cycle bottom due in 2023-2024 around $1000.
It's still not clear if the broad stock market is now going to correct down to a sub-cycle low or continue to rally. We are out of our strong reversal zone (May 26 - June 3), and all three of our stock market indices (DOW, S&P 500, NASDAQ) made new highs last week (in that time frame). These indices should fall now if this reversal is going to be effective. This is my preference, but sometimes "reversal" zones can correspond to break-outs if the market is very bullish. A rally to new highs from here would confirm that is happening. If this market does move higher, Friday (plus or minus a few trading days) could be another potential reversal point (a weak one). We will stay on the sidelines as we watch how this market moves over the next several days.
It appears that the U.S. Dollar Index made its final medium-term cycle bottom last Monday at 101.30.This means we have started a new cycle, and new cycles usually start off bullish. This reinforces the idea that the precious metals will move down now, at least short-term. The big question is whether or not the greenback can rise above its previous high of 105 on May 13. That will determine if the dollar is going to turn longer-term bullish or continue lower into a final 15-16 year bottom (due in 2023-2025 in the 50-55 range). We shouldn't have to wait long to see that question answered.
Crude oil is most likely in the eighth week of a medium-term cycle that began with the low of $92.14 on April 11 (July contract chart). It made its first sub-cycle low on May 19 at $103.24. This cycle has been very bullish, and this second sub-cycle is now rallying strongly to its top which could be anytime within the next 1 to 4 weeks. Because prices have now cleared significant resistance at $115, we could see more rallying from here. Two weeks from now we enter another reversal zone specifically for crude (June 20 - 28). This would be an ideal time frame for a top. As I've said in previous blogs, this market is highly volatile at this time due to the ongoing Russia/Ukraine war, and I am not comfortable chasing this rally until it makes a significant correction. We will remain on the sidelines of crude for now.
RSS Feed