MARKETS UPDATE (7:30 pm EDST)
All three major broad stock market indices (DOW, S&P 500, NASDAQ) started new medium-term cycles on March 23 and have been rallying bullishly from the lows on that date. We have been waiting for a high and subsequent first sub-cycle correction in these new cycles (down to 22.000 in the DOW and 2,600 in the S&P 500) to buy. While it's possible to still see these targets achieved, it looks like the corrective bottom could have been today, and if so a strong rally could follow from here. If that happens, the upcoming very strong reversal zone (May 11 - 20) could end up being a very significant top in this new cycle and would be a good point to sell short. On the other hand, if these indices push lower from here, we could see our original expectation of our significant target lows to buy in this same time frame. We'll wait to see what it will be - high or low - and trade accordingly. Still on the sidelines of this market.
We need to keep in mind that although these new medium-term cycles are now short-term bullish, I don't think the DOW or S&P 500 will make new all-time highs before these cycles peak and start a significant correction down to their final cycle bottoms. (The NASDAQ, however, MAY make a new all-time high. If it does and the DOW and S&P 500 do not, we will have a VERY strong bearish divergence signal and a good place to sell short.) If coronavirus fears subside strongly and all ALL THREE indices end up making new all-time highs (right now this seems unlikely) then we will have to postpone our short selling plans. Even if the final longer-term cycle tops to the broad stock market are still ahead, they should be in by the end of the year and then followed by a VERY severe correction in equity markets (i.e. possibly 30% - 50% or even more). In other words, we are still on track for the "big one" (crash) which may have already started..
Gold and silver prices did not move much today. This market is still giving us mixed signals. Ideally, we would like to see prices drop lower. If gold can get close to $1600 and silver close to $14 and stabilize, it would be an ideal place to buy both metals, especially if that happens in the upcoming reversal zone (May 11 - 20) or even later this week. Of course, these prices could rally instead and give us a high in that same reversal zone. Let's stay on the sidelines of the precious metals for now.
The U.S. Dollar Index is rallying today off what seems to be a support level just above 98. There is a reversal zone specifically for currencies coming up later this week (May 6 - 14). If the dollar can rally into it, it could push gold and silver prices down closer to our targets. Then a reversal in the dollar could trigger another rally in the metals from those targets. Let's watch for this.
We are still safely on the sidelines of crude oil after its recent dramatic plunge that took prices temporarily into negative territory. The cycle pattern in this market is still not clear, although it's possible a new medium-term cycle started with the low of $6.50 on April 21 (June contract chart). But the possibility of even lower prices still can't be ruled out. We will remain on the sidelines of this market until a cycle pattern is more clearly established.
All three major broad stock market indices (DOW, S&P 500, NASDAQ) started new medium-term cycles on March 23 and have been rallying bullishly from the lows on that date. We have been waiting for a high and subsequent first sub-cycle correction in these new cycles (down to 22.000 in the DOW and 2,600 in the S&P 500) to buy. While it's possible to still see these targets achieved, it looks like the corrective bottom could have been today, and if so a strong rally could follow from here. If that happens, the upcoming very strong reversal zone (May 11 - 20) could end up being a very significant top in this new cycle and would be a good point to sell short. On the other hand, if these indices push lower from here, we could see our original expectation of our significant target lows to buy in this same time frame. We'll wait to see what it will be - high or low - and trade accordingly. Still on the sidelines of this market.
We need to keep in mind that although these new medium-term cycles are now short-term bullish, I don't think the DOW or S&P 500 will make new all-time highs before these cycles peak and start a significant correction down to their final cycle bottoms. (The NASDAQ, however, MAY make a new all-time high. If it does and the DOW and S&P 500 do not, we will have a VERY strong bearish divergence signal and a good place to sell short.) If coronavirus fears subside strongly and all ALL THREE indices end up making new all-time highs (right now this seems unlikely) then we will have to postpone our short selling plans. Even if the final longer-term cycle tops to the broad stock market are still ahead, they should be in by the end of the year and then followed by a VERY severe correction in equity markets (i.e. possibly 30% - 50% or even more). In other words, we are still on track for the "big one" (crash) which may have already started..
Gold and silver prices did not move much today. This market is still giving us mixed signals. Ideally, we would like to see prices drop lower. If gold can get close to $1600 and silver close to $14 and stabilize, it would be an ideal place to buy both metals, especially if that happens in the upcoming reversal zone (May 11 - 20) or even later this week. Of course, these prices could rally instead and give us a high in that same reversal zone. Let's stay on the sidelines of the precious metals for now.
The U.S. Dollar Index is rallying today off what seems to be a support level just above 98. There is a reversal zone specifically for currencies coming up later this week (May 6 - 14). If the dollar can rally into it, it could push gold and silver prices down closer to our targets. Then a reversal in the dollar could trigger another rally in the metals from those targets. Let's watch for this.
We are still safely on the sidelines of crude oil after its recent dramatic plunge that took prices temporarily into negative territory. The cycle pattern in this market is still not clear, although it's possible a new medium-term cycle started with the low of $6.50 on April 21 (June contract chart). But the possibility of even lower prices still can't be ruled out. We will remain on the sidelines of this market until a cycle pattern is more clearly established.
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