Our bearish divergence signal in the broad stock market from early this week has been negated as all three of our indices (DOW, S&P 500, NASDAQ) have now broken above their June highs. Nevertheless, we are still in a strong reversal zone that ends today but overlaps with another (Aug. 12 - 19) through next week; and yet another reversal zone runs from Aug. 23 - 31. This means we could see a significant high or low (or more than one) anytime through the end of this month. Today equities rose steeply early in the day but then fell sharply and lost their gains by the closing bell. That could signal a top. We are still anticipating some sort of sub-cycle correction in all three indices anytime now, which we may look to buy. For now, we are still on the sidelines of this market.
Gold and silver prices have been correcting down a bit this week as we expected - but so far not by much. We are still holding our long position in gold and intend to ride out any modest correction now. We are waiting to buy silver on any significant corrective dip that doesn't go too low. We enter another reversal zone specifically for these metals on Friday (Aug. 12 - 23), so we could see a corrective sub-cycle bottom in that time frame. We will watch for that. Currently we are long in gold and out of silver.
Crude oil prices have been rallying this week, which is good news for our long position entered on Tuesday. It looks like that low of $87.01 (Sept. contract chart) on Aug. 5 could be the start of a new medium-term cycle in crude, but prices have to start closing above $102 to support that. Because we have reversal zones through the end of this month, we could see some corrective dips in any rally now. But as long as prices stay above $87.01, we will try to ride them out as we hold our long position in crude.