At Friday's market close, the S&P 500 finally broke and closed below its 15-day and 45-day moving averages. This means that it, along with the DOW, have likely made their final medium-term cycle tops and are in the process of correcting down to their final cycle bottoms. The NASDAQ, however, still looks short-term bullish as it stays poised above a support line at 14,000 and comfortably above its 15-day and 45-day moving averages (so far). It would be nice to see the NASDAQ make another new all-time high early this week in our reversal zone and near our June 23 potential "turning point".
Right now, the DOW's trend is very bearish, and it may be this index that will lead the broad stock market into a severe long-term correction. The S&P 500 has also turned bearish. Nevertheless, the NASDAQ seems to be bucking this trend, and this index could turn out to be the leader that will push another strong rally into the summer before we see the major downfall in equities that could be just around the corner. The NASDAQ is obviously at this point the best candidate to sell short. If it does make a new high this week, we will likely enter a short position in an index fund tied to the NASDAQ. Let's stay on the sidelines tonight and wait for the markets to open tomorrow before making any trading decisions.
Because of last week's Fed "scare" (i.e. the possibility of an early hike in interest rates), gold prices have turned bearish, at least temporarily. Gold's medium-term cycle is old and should be coming to an end soon (over the next several weeks). Last week's downturn could therefore be the start of this cycle's final correction down to the cycle bottom. Unless gold can start to rally again and make a new high above $1900, we will assume that bearish scenario to be the case. We are still holding our long position in gold from last week. Let's put a stop loss on that position based on prices closing below $1750. There's a chance gold made a sub-cycle low last Friday so we might see a rally this week that would offset some of our current loss on this trade.
If gold prices fall but can stay above $1677 over the next few weeks, we may look to buy again at the final low in this cycle as another rally could take prices back above $1900. Let's remain on the sidelines of gold for now.
Silver's medium-term cycle is similar to gold's right now. It is an old cycle that is due to bottom over the next few weeks. Friday's low (following a severe plunge during the week) may be a significant sub-cycle bottom, and if so, we could see prices rally next week (although that rally may not get too far). Otherwise, we will wait for prices to go lower into the final cycle bottom, and as with gold, possibly go long there. Still on the sidelines of silver.
Crude oil made a new high for its current medium-term cycle last Wednesday at $72.99 (July contract chart) at the start of a reversal zone specifically for crude (June 15 - 23). There are still three days left in this reversal, so prices could edge higher early next week to form a sub-cycle top. If they don't, we expect prices to correct lower to a sub-cycle bottom due one to three weeks from now. This market's trend had been looking bullish, but now it looks like crude's trend could be turning bearish. It all may depend on how the broad stock market trends into the summer. If equities can manage another significant rally, crude may follow suit. Let's stay on the sidelines of this market for now.