MARKETS UPDATE (10:30 pm EDT)
All three broad stock market indices (DOW, S&P 500, NASDAQ) rose last week and made new weekly highs on Friday, but none of them made a new all-time high (the NASDAQ came close). We are about to enter another strong general reversal zone (May 13 - 25). If these indices push higher into next week (or the following week), they will likely form a significant top and reverse back down. But will they make new all-time highs before that reversal? If all three do, that would be a bullish signal. But if only one or two make new highs, we would have a bearish reversal signal. It's still too early to label the current medium-term cycles, but the nature of any upcoming correction should make that more clear. This is not a time to buy, and it's too early to tell if we should be selling short. We remain on the sidelines of this market as we move into this new reversal zone next week.
As we expected, gold and especially silver prices rose sharply last week. We note, however, that neither one exceeded their recent April 12 high. We also note that gold's high on Friday was inside a strong potential "pivot point" for that metal, and that tomorrow and Tuesday is another strong potential "pivot point' for silver (as well as being the first two days inside our general reversal zone). If prices edge a bit higher early this week, it may be a good time to take profits in our long positions in both metals. Let's be on "trade alert" tomorrow for gold and silver.
Crude oil made an isolated low last Wednesday ($76.89 - June contract chart) and rallied to resistance around $80 on Friday before closing that day back down to $78.26). Because last Wednesday's low was not in any strong reversal zone, there's a good chance prices are going to fall lower into next week which is the first half of a very strong general reversal zone as well as a reversal zone specific to crude. There is strong support for crude from $74 - $76, so we will look for a final bottom to the current medium-term cycle (now due) in that area, which should be a good place to buy. For now, we are still on the sidelines of crude.
All three broad stock market indices (DOW, S&P 500, NASDAQ) rose last week and made new weekly highs on Friday, but none of them made a new all-time high (the NASDAQ came close). We are about to enter another strong general reversal zone (May 13 - 25). If these indices push higher into next week (or the following week), they will likely form a significant top and reverse back down. But will they make new all-time highs before that reversal? If all three do, that would be a bullish signal. But if only one or two make new highs, we would have a bearish reversal signal. It's still too early to label the current medium-term cycles, but the nature of any upcoming correction should make that more clear. This is not a time to buy, and it's too early to tell if we should be selling short. We remain on the sidelines of this market as we move into this new reversal zone next week.
As we expected, gold and especially silver prices rose sharply last week. We note, however, that neither one exceeded their recent April 12 high. We also note that gold's high on Friday was inside a strong potential "pivot point" for that metal, and that tomorrow and Tuesday is another strong potential "pivot point' for silver (as well as being the first two days inside our general reversal zone). If prices edge a bit higher early this week, it may be a good time to take profits in our long positions in both metals. Let's be on "trade alert" tomorrow for gold and silver.
Crude oil made an isolated low last Wednesday ($76.89 - June contract chart) and rallied to resistance around $80 on Friday before closing that day back down to $78.26). Because last Wednesday's low was not in any strong reversal zone, there's a good chance prices are going to fall lower into next week which is the first half of a very strong general reversal zone as well as a reversal zone specific to crude. There is strong support for crude from $74 - $76, so we will look for a final bottom to the current medium-term cycle (now due) in that area, which should be a good place to buy. For now, we are still on the sidelines of crude.
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