MARKETS UPDATE (11:30 pm EDST)
In my 3/9/22 broad stock market "CRASH UPDATE" on the Home Page I wrote:
"It is likely that the first stage down in this potential long-term correction would be completed by the end of March 2022. If that correction is less than 20%, there is a chance the market will recover from there and not collapse any further.
But if the first stage down exceeds 20%, we could be on course for a crash of 70 - 90% over the next 10 years. If severe, it could bottom as soon as 2024."
We are now in the last week of March. Unless equity markets plummet sharply now and over the next week or two, it looks like the corrective bottom could be in with the Feb. 24 lows of 32,272 in the DOW and 4,116 in the S&P 500, and the March 14 low of 12,555 in the NASDAQ (a double-bottom to the Feb. 24 low at 12,598). These lows represent a 12% drop in the DOW, a 14% drop in the S&P 500, and a 22% drop in the NASDAQ.
So the "first stage down" may have happened with only the NASDAQ exceeding a 20% loss - and only by a small margin. Does this mean we have avoided a crash? It's possible, but it's also possible we could get one more rally into mid-April that could challenge the all-time highs in these indices before turning down again for a severe correction that could greatly exceed 20% in all three indices. But if all three indices clearly break and close above their all-time highs, it will suggest that a major crash has been averted.
Today equity markets are floundering a bit. Our reversal zone ended on Friday, but there are some other technical signals suggesting some sort of top this week and a correction to follow. If the market can stay up and push higher into next week, we may get a significant top then as we enter a new reversal zone April 4 - 20. Either way, we will pay attention to the depth of the next correction. A modest correction may give us an opportunity to go long and ride a rally to challenge the all-time highs. But if these indices start falling below their Feb. 24 lows, it means a more serious correction is underway. Good targets for a modest corrective drop could be around 33,600 in the DOW, 4,300 in the S&P 500, and 13,500 in the NASDAQ. We will watch for these levels as potential buy spots. We are still on the sidelines of the broad stock market.
My outlook on gold and silver hasn't changed since my last update (March 21). It looks like both metals are nearing the end of their current medium-term cycles with one last sub-cycle rally off their lows from March 16. This rally could end anytime now, and in fact, it may have topped out last week as both metals are down sharply today. Once the tops are in, we should expect prices to fall sharply to the final medium-term cycle bottoms due 3 to 5 weeks from now. We were planning on selling short at the sub-cycle top around $2050 in gold and $26.50 in silver, but we may not get to do that if the corrections have already started from last week's tops. Let's wait and see if prices can push higher and closer to our targets this week or next and perhaps give us a bearish divergence signal (gold or silver making a new high without the other). That would be an ideal signal to sell short. We will remain on the sidelines of gold and silver for now.
In last Tuesday's blog on crude oil I wrote:
"Right now, crude's medium-term cycle is getting "long in the tooth" (old) which means the final cycle top is due and may have already happened with that $126 high two weeks ago. We are seeing another rally now that could challenge that high before prices turn down and fall to the final medium-term cycle bottom due anytime over the next 6-7 weeks. Any rally that stalls out could be an opportunity to sell short, but it might be safer to wait for the final cycle bottom and then buy. The longer-term cycles in crude still look quite bullish, so any significant correction over the next month or two could be a buying opportunity"
All of this is still valid. It looks like the rally did stall out around $116 (May contract chart) last Thursday as prices have been falling from there. As per my previous advice, I think we will wait for the final cycle bottom to buy. Because this cycle has been so bullish, the target for the final cycle bottom should be around $85 - $90, which is not far below our current price.
There is also a small chance that the old cycle ended and a new one began with the March 15 low at $92.20. If that's true, the market should be very bullish now, but today prices are falling steeply. It's more likely crude will fall lower and make it's final bottom sometime over the next several weeks.. We will watch for that bottom to buy. Another possibility here would be a sudden explosive rally above the $126.52 high of March 7 before the final fall to the medium-term cycle bottom. Given the current geopolitical instability of the Russia/Ukraine war, we can't rule out another surge in prices. In that scenario, we could even see a retest of the all-time high around $145 - $150. I don't expect that to happen, but anything is possible these days. We will remain on the sidelines of crude for now.
In my 3/9/22 broad stock market "CRASH UPDATE" on the Home Page I wrote:
"It is likely that the first stage down in this potential long-term correction would be completed by the end of March 2022. If that correction is less than 20%, there is a chance the market will recover from there and not collapse any further.
But if the first stage down exceeds 20%, we could be on course for a crash of 70 - 90% over the next 10 years. If severe, it could bottom as soon as 2024."
We are now in the last week of March. Unless equity markets plummet sharply now and over the next week or two, it looks like the corrective bottom could be in with the Feb. 24 lows of 32,272 in the DOW and 4,116 in the S&P 500, and the March 14 low of 12,555 in the NASDAQ (a double-bottom to the Feb. 24 low at 12,598). These lows represent a 12% drop in the DOW, a 14% drop in the S&P 500, and a 22% drop in the NASDAQ.
So the "first stage down" may have happened with only the NASDAQ exceeding a 20% loss - and only by a small margin. Does this mean we have avoided a crash? It's possible, but it's also possible we could get one more rally into mid-April that could challenge the all-time highs in these indices before turning down again for a severe correction that could greatly exceed 20% in all three indices. But if all three indices clearly break and close above their all-time highs, it will suggest that a major crash has been averted.
Today equity markets are floundering a bit. Our reversal zone ended on Friday, but there are some other technical signals suggesting some sort of top this week and a correction to follow. If the market can stay up and push higher into next week, we may get a significant top then as we enter a new reversal zone April 4 - 20. Either way, we will pay attention to the depth of the next correction. A modest correction may give us an opportunity to go long and ride a rally to challenge the all-time highs. But if these indices start falling below their Feb. 24 lows, it means a more serious correction is underway. Good targets for a modest corrective drop could be around 33,600 in the DOW, 4,300 in the S&P 500, and 13,500 in the NASDAQ. We will watch for these levels as potential buy spots. We are still on the sidelines of the broad stock market.
My outlook on gold and silver hasn't changed since my last update (March 21). It looks like both metals are nearing the end of their current medium-term cycles with one last sub-cycle rally off their lows from March 16. This rally could end anytime now, and in fact, it may have topped out last week as both metals are down sharply today. Once the tops are in, we should expect prices to fall sharply to the final medium-term cycle bottoms due 3 to 5 weeks from now. We were planning on selling short at the sub-cycle top around $2050 in gold and $26.50 in silver, but we may not get to do that if the corrections have already started from last week's tops. Let's wait and see if prices can push higher and closer to our targets this week or next and perhaps give us a bearish divergence signal (gold or silver making a new high without the other). That would be an ideal signal to sell short. We will remain on the sidelines of gold and silver for now.
In last Tuesday's blog on crude oil I wrote:
"Right now, crude's medium-term cycle is getting "long in the tooth" (old) which means the final cycle top is due and may have already happened with that $126 high two weeks ago. We are seeing another rally now that could challenge that high before prices turn down and fall to the final medium-term cycle bottom due anytime over the next 6-7 weeks. Any rally that stalls out could be an opportunity to sell short, but it might be safer to wait for the final cycle bottom and then buy. The longer-term cycles in crude still look quite bullish, so any significant correction over the next month or two could be a buying opportunity"
All of this is still valid. It looks like the rally did stall out around $116 (May contract chart) last Thursday as prices have been falling from there. As per my previous advice, I think we will wait for the final cycle bottom to buy. Because this cycle has been so bullish, the target for the final cycle bottom should be around $85 - $90, which is not far below our current price.
There is also a small chance that the old cycle ended and a new one began with the March 15 low at $92.20. If that's true, the market should be very bullish now, but today prices are falling steeply. It's more likely crude will fall lower and make it's final bottom sometime over the next several weeks.. We will watch for that bottom to buy. Another possibility here would be a sudden explosive rally above the $126.52 high of March 7 before the final fall to the medium-term cycle bottom. Given the current geopolitical instability of the Russia/Ukraine war, we can't rule out another surge in prices. In that scenario, we could even see a retest of the all-time high around $145 - $150. I don't expect that to happen, but anything is possible these days. We will remain on the sidelines of crude for now.
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