In last Thursday's blog on the broad stock market I wrote:
"...it now looks like last week's new low of 1810 in the S&P 500 could be the start of the new medium-term cycle (instead of the 1812 low of Jan.20). If that's the case, it is too early for the new cycle to peak, and we could see at least another week of rallying."
We can now confirm that the start of the new medium-term cycle in the S&P 500 was on Feb. 11 at 1810. The start of a new cycle is always bullish for at least two weeks, and this only starts the second week. The small dip this index took last Thursday and Friday was within a mild reversal zone, and it seems to be over as the S&P 500 rallied strongly today and closed above the 45-day moving average (which confirms this as a new cycle). I suspect we will now see more rallying into our original target area of 1950 - 2000 as we enter the month of March next week. We are still on the lookout for a good spot to sell short this market (as long as the S&P 500 stays under 2100 and the DOW stays under 17,800), and because there are several strong reversal zones in March we may get one soon. March could be a wild market with more than one reversal, but we will try to identify the most significant turning points based on cycle and technical analysis. March 7, March 16, and March 23 could see especially strong reversals.
I am going to use 1980 as a general target for the S&P 500 and 17,200 for the DOW. If we approach these levels near any of those March dates, we may have a good opportunity to sell short what could be a major correction in equity markets . Still on the sidelines of the broad stock market.
After rallying for most of last week, precious metal prices fell strongly today. The correction from the Feb. 11 highs may not be over yet. Thursday and Friday of this week could be a major turning point for both gold and silver so we will watch that time for a bottom to buy if prices continue lower. If instead prices start to rally again, we may look to sell short from a top. Short-term signals are mixed right now in this market so these metals could move either way. Silver still hasn't hit our target for a bottom ($14.50), but it is getting closer as the spot price plunged briefly below $15 in early morning trading today. Still on the sidelines of both gold and silver.
Today's dip in gold and silver prices was triggered by a sudden surge in the U.S. Dollar Index. The dollar rose close to 97.5 intraday, There is very strong resistance between 97.5 and 98.5 so it may not get much further before backing down again. If it does back down, the precious metals may resume their rally.
Crude oil prices surged strongly today with the broad stock market and briefly broke above $32 intraday. This is a good sign that we are on track with a significant rally from what looks like the new cycle bottom on Feb. 11. I would like to see prices close above $32 to be more confident that this is indeed a new cycle. Until that happens, there is still a danger of prices moving back down below $26.13. A clear break over $32 could lead to a rally to $38 or higher. Holding my long position in crude for now.