The DOW, S&P 500 and NASDAQ are now late in their medium-term cycles. This means that their final cycle tops are due and to be followed by a sharp correction down to their final cycle bottoms. The DOW and S&P 500 most likely made their tops on June 8 (at 27,580 and 3,233, respectively), but it looks like the NASDAQ made its top last week (at 10,221 on Tuesday). The corrective drops are most likely now in progress so we need to watch for the final cycle bottoms. Our current reversal zone technically ends this Wednesday, but I am going to extend it into the end of the week (July 3) because it is such a strong one. We could see these cycles bottom this week, but that would be a bit early. A better fit for a bottom would be in our NEXT reversal zone coming up July 13-21. Good bottom targets for each index would be around 23,400 for the DOW, 2,700 for the S&P 500, and 8,500 for the NASDAQ. We will now look for a spot to buy in those areas either this week or around mid-July (more likely). A case of intermarket BULLISH divergence (one or two of these indices - but not all three - making new lows) would be a good sign the bottoms are in. We will watch for that as well as our targets. On the sidelines of the broad stock market for now
Note that an increase in COVID-19 cases is now making the market nervous and could drive these indices lower towards our targets. Nevertheless, the Fed seems determined to keep this market buoyant with endless money printing, and that could easily rescue equities and launch another rally if support can establish itself in our target areas within a reversal zone.
Our current gold and silver medium-term cycles are also late stage. There's a good chance they are topping out now and a sharp correction down to the final cycle bottoms could be imminent. A good target for a cycle bottom in silver would be around $16. Gold prices could go as low as $1600, but may only get down to $1670 where there is some strong support. All of these levels may be good places to buy as the longer-term trend in both metals looks quite bullish. As with the broad stock market, these bottoms would ideally happen in our next reversal zone in mid-July. (In fact, there is another reversal zone specifically for the precious metals July 9-17.) If prices push higher this week, we could see a top around Thursday/Friday. Currently on the sidelines of gold and silver.
The sub-cycle patterns in crude oil are a bit ambiguous at the moment, but if prices can push down to around $34 this week, we may have a significant sub-cycle low and a good spot to buy. Let's stay on the sidelines for now.
The U.S. Dollar Index has been a bit indecisive over the last few weeks as it tries to figure out how far the Fed's money printing spree will (or can) go. If the Fed continues to broadcast "dovish" rhetoric, the greenback will lose more value. As I stated earlier, this is what we are expecting the Fed to do (i.e. to "rescue" equity markets - after a sharp correction). Such a drop in the dollar could also ignite a new rally in the precious metals - hopefully from the "buy" targets suggested above. We will watch for this.