As I mentioned in my last blog, the cycle pattern of the DOW is a bit ambiguous right now, and the medium-term cycles of the S&P 500 and NASDAQ are more clear. Regardless of the cycle pattern, the DOW could be making a significant top now, and especially early this week as there is a minor potential reversal pivot point in effect through Wednesday. Both the DOW and S&P 500 made new all-time highs last week without the NASDAQ, and that intermarket bearish divergence signal continues this week - until the NASDAQ exceeds its all-time high (14,207 from April 29). Let's watch for a short-term correction from a top early this week as an opportunity to cover any short positions in the DOW. A good target range would be around 34,000 - 34,200, which would take us close to our entry point from April 26 and give us a chance to exit with very little or no loss. It's true that we are looking for a "final" top in the current cycle to sell short for a very severe longer-term correction in this market, but right now it's looking like the DOW could go significantly higher before that final top is in. Sometimes a very serious correction is preceded by a "blow-off" top where prices rally quickly and steeply before they plummet down. This kind of volatility makes it difficult to call the exact top. There is a possibility now of the DOW getting as high as 37,000 before it turns down for a serious correction.That is why we are looking to cover our current short position this week.
We will also look to cover our short position in the S&P 500 if this index drops below 4,200 from any high early in the week. This is close to our entry point which should negate any loss on the trade. The NASDAQ most likely made a sub-cycle low last Thursday and looks poised to rally from there, possibly to a new all-time high (or at least a double-top to the 14,207 all-time high on April 29). Nevertheless, this index could also make a short-term dip from a high early this week. As with the other two indices, we will watch for that as an opportunity to cover our short short position. Unlike our short positions in the DOW and S&P 500, our short NASDAQ trade is not "in the red" and has a profit. We may therefore just cover (exit) that position tomorrow and not wait for any dip later in the week.
Still holding short positions in all three indices, but be ready for trade alerts this week.
Gold and silver were VERY bullish last week and did not drop down to the corrective targets we were hoping to see.
There is a good chance that gold will rally strongly now to at least the $1900 level and possibly even to test or exceed the all-time high of $2070 from last year. This means we should be looking to buy any significant corrective lows. Prices are now approaching the $1850 level where there is considerable resistance. Perhaps we'll see a turn back from there with a corrective dip to buy.
Silver is also looking very bullish right now, but there is still a chance prices could make a short-term corrective sub-cycle drop to the $25 area. That would be a good buy spot if it happens.
We are still on the sidelines of both metals and looking for buying opportunities.
As I stated in my last blog on crude oil, it appears that crude started a new medium-term cycle with its $57.29 low on March 23 (June contract chart). Last week's low at $63.90 may have been it's first sub-cycle dip, but it only lasted two days, which is a bit short for a significant sub-cycle correction. That means it could push lower this week. If it does, we may look to buy as this cycle is young and looks to be quite bullish. An eventual price target of $75 is not out of the question. We are on the sidelines of crude for now,