MARKETS UPDATE (11:30 pm EDT)
After taking a steep dive last Tuesday, the broad stock market stabilized and did not move much for the rest of the week (although the NASDAQ seemed to make a little upward progress on Friday). The current medium-term cycles in the DOW, S&P 500 and NASDAQ are nearly completed, and the final corrective bottoms to these cycles are expected any time over the next few weeks. The most likely time for these bottoms to happen would be during the next major reversal zone, and that is coming up in the middle of April. Although less likely, there is a small chance that these cycles are bottoming now. Aging baby boomers may still be funding their retirement accounts into April 15, and this (along with Wall Street's ongoing approval of President Trump) could still buoy equity markets for several more weeks. If that happens, we might see the mid-April reversal become a top instead of a bottom. In that scenario, any bottom forming now would be the start of a new medium-term cycle, and we could see this market quickly race up to new all-time highs in April. That would set up yet another shorting opportunity as that mid-April reversal could easily kick-start a very severe longer-term correction in the broad stock market. For now, however, we will assume that this market is falling into mid-April until we see more technical evidence of a bottom forming this week. Holding my short position in the broad stock market.
Gold and silver prices continue to edge higher but still seem reluctant to rally strongly. As with the broad stock market, the current medium-term cycles in these metals are now coming to an end so we can expect prices to turn down soon and make their final corrective bottoms. The trick here is calling the top before this correction. There are some technical signals suggesting a top could happen now (this week). If that happens, prices would fall into the first two weeks of April (the next reversal zone for the precious metals) and gold and silver would make their cycle bottoms then. Those bottoms would be a good spot to buy. On the other hand, if prices push higher this week (and next week) we could see a good shorting opportunity in early April as gold and silver make their final cycle highs in a strong reversal zone. If we see intermarket bearish divergence this week (where one metal makes a new high but the other does not) then I will consider selling short. Otherwise, it may be best to just remain on the sidelines and watch how prices move into the early April reversal zone.
Crude oil may have formed its medium-term cycle bottom last Wednesday at $47.01 (May contract chart), but it would be better if it formed in the first week of April (crude's next reversal zone). Let's wait and see if prices can move lower into late this week or the following week and look to buy then. Out of crude oil for now.
After taking a steep dive last Tuesday, the broad stock market stabilized and did not move much for the rest of the week (although the NASDAQ seemed to make a little upward progress on Friday). The current medium-term cycles in the DOW, S&P 500 and NASDAQ are nearly completed, and the final corrective bottoms to these cycles are expected any time over the next few weeks. The most likely time for these bottoms to happen would be during the next major reversal zone, and that is coming up in the middle of April. Although less likely, there is a small chance that these cycles are bottoming now. Aging baby boomers may still be funding their retirement accounts into April 15, and this (along with Wall Street's ongoing approval of President Trump) could still buoy equity markets for several more weeks. If that happens, we might see the mid-April reversal become a top instead of a bottom. In that scenario, any bottom forming now would be the start of a new medium-term cycle, and we could see this market quickly race up to new all-time highs in April. That would set up yet another shorting opportunity as that mid-April reversal could easily kick-start a very severe longer-term correction in the broad stock market. For now, however, we will assume that this market is falling into mid-April until we see more technical evidence of a bottom forming this week. Holding my short position in the broad stock market.
Gold and silver prices continue to edge higher but still seem reluctant to rally strongly. As with the broad stock market, the current medium-term cycles in these metals are now coming to an end so we can expect prices to turn down soon and make their final corrective bottoms. The trick here is calling the top before this correction. There are some technical signals suggesting a top could happen now (this week). If that happens, prices would fall into the first two weeks of April (the next reversal zone for the precious metals) and gold and silver would make their cycle bottoms then. Those bottoms would be a good spot to buy. On the other hand, if prices push higher this week (and next week) we could see a good shorting opportunity in early April as gold and silver make their final cycle highs in a strong reversal zone. If we see intermarket bearish divergence this week (where one metal makes a new high but the other does not) then I will consider selling short. Otherwise, it may be best to just remain on the sidelines and watch how prices move into the early April reversal zone.
Crude oil may have formed its medium-term cycle bottom last Wednesday at $47.01 (May contract chart), but it would be better if it formed in the first week of April (crude's next reversal zone). Let's wait and see if prices can move lower into late this week or the following week and look to buy then. Out of crude oil for now.
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