MARKETS UPDATE (10:30 pm EDT)
The DOW, S&P 500, and NASDAQ all plunged last week to new lows for the month on Thursday then sharply reversed back up in the center of a minor (weak) reversal zone. Today (Monday) these indices continued up with the DOW gaining nearly 90 points. Thursday's low was likely a sub-cycle bottom for all three indices, and if so, the broad stock market should now rally at least into the next reversal zone (which is a strong one) in the first week of June. If this rally turns south and starts moving below last Thursday's lows, however, we may have to abandon that bullish view, especially if the DOW breaks below 20,379 or the S&P 500 breaks below 2,322 (the start of their new medium-term cycles). Still holding my long position in the broad stock market.
Gold and especially silver rallied strongly today. Last week we sold our silver long position because of the possibility of silver making a new low and forming its medium-term cycle bottom this week or next with bullish divergence to gold. Today's strong rally is negating that scenario, and it looks like May 9 was the start of a new medium-term cycle in silver (as it appears to be for gold). We are still in a weak reversal zone through Wednesday so prices could reverse and turn down here for a small correction. If that happens, we will look to buy back silver as long as it stays above $16.07. We also want to see gold stay above $1230, and especially above $1214. Still holding my long position in gold but out of silver for now.
The U.S. Dollar Index continues to fall as it broke below 97 today. The first week of June is a strong reversal zone for currencies so it looks like the greenback could move lower into that time before it finds significant support. A bearish dollar would support more rallying of the precious metals.
Crude oil prices have been pushing higher, and today they touched $51.06 (June contract chart) before closing at $50.73. This new high for the month is confirming the idea that the low of $43.76 on May 5 was the start of a new medium-term cycle (which is bullish). We should now look to buy the bottom of any correction that holds above that low. We could see that correction soon as we are still in a reversal zone (through Wednesday) and this market is rallying to a new high. On the sidelines of crude for now.
The DOW, S&P 500, and NASDAQ all plunged last week to new lows for the month on Thursday then sharply reversed back up in the center of a minor (weak) reversal zone. Today (Monday) these indices continued up with the DOW gaining nearly 90 points. Thursday's low was likely a sub-cycle bottom for all three indices, and if so, the broad stock market should now rally at least into the next reversal zone (which is a strong one) in the first week of June. If this rally turns south and starts moving below last Thursday's lows, however, we may have to abandon that bullish view, especially if the DOW breaks below 20,379 or the S&P 500 breaks below 2,322 (the start of their new medium-term cycles). Still holding my long position in the broad stock market.
Gold and especially silver rallied strongly today. Last week we sold our silver long position because of the possibility of silver making a new low and forming its medium-term cycle bottom this week or next with bullish divergence to gold. Today's strong rally is negating that scenario, and it looks like May 9 was the start of a new medium-term cycle in silver (as it appears to be for gold). We are still in a weak reversal zone through Wednesday so prices could reverse and turn down here for a small correction. If that happens, we will look to buy back silver as long as it stays above $16.07. We also want to see gold stay above $1230, and especially above $1214. Still holding my long position in gold but out of silver for now.
The U.S. Dollar Index continues to fall as it broke below 97 today. The first week of June is a strong reversal zone for currencies so it looks like the greenback could move lower into that time before it finds significant support. A bearish dollar would support more rallying of the precious metals.
Crude oil prices have been pushing higher, and today they touched $51.06 (June contract chart) before closing at $50.73. This new high for the month is confirming the idea that the low of $43.76 on May 5 was the start of a new medium-term cycle (which is bullish). We should now look to buy the bottom of any correction that holds above that low. We could see that correction soon as we are still in a reversal zone (through Wednesday) and this market is rallying to a new high. On the sidelines of crude for now.
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