MARKETS UPDATE (10:00 pm EDT)
We are now at a major crossroads in the broad stock market in terms of our cycle analysis. There are three ways to label the current medium-term cycle in the DOW. Two of them are very bearish, but the third one is very bullish.
I had been going with the idea of a new medium-term cycle starting on Jan. 13's low of 41,845. That cycle would be bearish as it has moved well below its starting point. A second possible labeling could be a medium-term cycle starting from the 40,662 low on March 13. That cycle would also be bearish as last week's sell-off took this index well below 40,662.
A third possibility is starting to look possible (even probable). This would be a new medium-term cycle starting with this week's deep low at 36,611 or perhaps another deeper low to come next week. This labeling is appealing because we are in the time frame for a longer-term 3-year cycle bottom, and Monday's plunge to 36,611 is in the the ideal target range for this 3-year cycle (33,352 - 37,861). Monday's low was also inside a general reversal zone (April 1 - April 8). If this low is the start of both a new medium-term AND 3-year cycle, it could mean the market is about to turn very bullish.
The strong rally off Monday's lows was the result of President Trump suspending the severe tariffs he implemented last week. But how long will Mr. Trump hold back? Does Wall Street have enough confidence to rally strongly? If it does, this could mark the start of a new 3-year cycle and a bullish rally. We note that for this scenario to be valid, we must see the DOW first break through the 15-day and 45-day moving averages and then clear it's all-time high of 45,073 (from Dec. 2024). Until that happens, this market is still bearish and could roll back over anytime to make deeper lows. Monday's low was inside a reversal zone, but we enter another reversal zone next week (April 14 - 25), so another turning point could be imminent. Due to the uncertainty in this market right now, I am remaining on the sidelines.
Crude oil prices took another dive this week and nearly touched the $55 level (May contract chart). This was inside a general reversal zone, and prices seem to be finding some support near $60 (for now). There are no reversal zones specifically for crude for the rest of this month, but we enter another general reversal zone next week. That might be a top or bottom (deeper bottom or "double-bottom") in crude. I am still holding my long position for a better exit point on any short-term rally. All traders who were stopped out of any long positions should stay out.
After a two trading-day drop, gold prices surged back up to a new all-time high today ($3213) while silver remained well below its highs from last week. This creates a strong bearish divergence signal between the metals. We also note that we just entered a reversal zone specifically for the precious metals (April 9 - 17). This means a top and reversal back down could be imminent in both metals. We are still on the sidelines of gold and silver.
We are now at a major crossroads in the broad stock market in terms of our cycle analysis. There are three ways to label the current medium-term cycle in the DOW. Two of them are very bearish, but the third one is very bullish.
I had been going with the idea of a new medium-term cycle starting on Jan. 13's low of 41,845. That cycle would be bearish as it has moved well below its starting point. A second possible labeling could be a medium-term cycle starting from the 40,662 low on March 13. That cycle would also be bearish as last week's sell-off took this index well below 40,662.
A third possibility is starting to look possible (even probable). This would be a new medium-term cycle starting with this week's deep low at 36,611 or perhaps another deeper low to come next week. This labeling is appealing because we are in the time frame for a longer-term 3-year cycle bottom, and Monday's plunge to 36,611 is in the the ideal target range for this 3-year cycle (33,352 - 37,861). Monday's low was also inside a general reversal zone (April 1 - April 8). If this low is the start of both a new medium-term AND 3-year cycle, it could mean the market is about to turn very bullish.
The strong rally off Monday's lows was the result of President Trump suspending the severe tariffs he implemented last week. But how long will Mr. Trump hold back? Does Wall Street have enough confidence to rally strongly? If it does, this could mark the start of a new 3-year cycle and a bullish rally. We note that for this scenario to be valid, we must see the DOW first break through the 15-day and 45-day moving averages and then clear it's all-time high of 45,073 (from Dec. 2024). Until that happens, this market is still bearish and could roll back over anytime to make deeper lows. Monday's low was inside a reversal zone, but we enter another reversal zone next week (April 14 - 25), so another turning point could be imminent. Due to the uncertainty in this market right now, I am remaining on the sidelines.
Crude oil prices took another dive this week and nearly touched the $55 level (May contract chart). This was inside a general reversal zone, and prices seem to be finding some support near $60 (for now). There are no reversal zones specifically for crude for the rest of this month, but we enter another general reversal zone next week. That might be a top or bottom (deeper bottom or "double-bottom") in crude. I am still holding my long position for a better exit point on any short-term rally. All traders who were stopped out of any long positions should stay out.
After a two trading-day drop, gold prices surged back up to a new all-time high today ($3213) while silver remained well below its highs from last week. This creates a strong bearish divergence signal between the metals. We also note that we just entered a reversal zone specifically for the precious metals (April 9 - 17). This means a top and reversal back down could be imminent in both metals. We are still on the sidelines of gold and silver.
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