Caveat: All financial markets may exhibit strong volatility through the end of this month which means we can see strong swings (up and down) that could be of short duration. We should keep this in mind and be very careful in our trading moves. Markets should become a bit more stable in April.
I am starting to think that last Monday's low in the DOW (25,208 on March 11) was a significant sub-cycle bottom and that sub-cycle bottoms also formed in the S&P 500 and NASDAQ on March 8 (at 2,722 in the S&P 500 and 7,333 in the NASDAQ). If this is correct, these indices could rally strongly over the next several weeks, possibly to new all-time highs. We have to acknowledge, however, that we are now in the center of a strong reversal zone (it ends Thursday), and we are seeing a continuation of bearish divergence this week as both the S&P 500 and NASDAQ made new monthly highs today while the DOW is still significantly below its Feb. 25 high of 26,241. This strongly suggests we will see some sort of correction start this week. If such a correction doesn't go too low, it may give us a good opportunity to go long in the broad stock market. We will watch for this. Still on the sidelines of this market.
We are also at the center of a reversal zone specifically for precious metals, and both gold and silver prices are edging a bit higher today. This means we could see a high and a reversal before the end of the week. If that happens, we ideally want to see one metal make a new monthly low without the other for a bullish divergence signal to buy. While it is possible that both metals started new medium-term cycles with their lows in early March (gold at $1281 on March 7 and silver at $14.90 on March 5), it is more likely that only one metal started a new cycle and the other is still completing an older cycle that will bottom soon below one of the lows just mentioned. We will watch for that to go long in silver. We are already long in gold and will hold that position for now.
Crude oil prices continue to edge higher (they got to to $59.23 today - April contract chart), but a sub-cycle top is due now, and we are in the middle of a reversal zone that could influence this market. We could easily see a top this week and a reversal in prices. A good target now for a sub-cycle correction would be in the $54 - $56 range. We will watch for this as a good buy spot. Still on the sidelines of crude.