It still looks like last Tuesday was the top of the current medium-term cycle in the broad stock market (DOW and S&P 500) and that both these indices are now falling towards the final bottom of this cycle. We are now moving into the center of the current strong reversal zone for this (and other) markets which is next Monday (on the solar eclipse), but this reversal zone could extend into Aug. 28. We could see a bottom form any time now. Prices still have next week to move much lower, but it is possible (though less likely) for this correction to be short and shallow and followed by another strong rally to new highs. If that happens, and we see another top by Aug.28, it will be another opportunity to sell short. For now, however, let's stick with the idea of the market falling further into next week to form a final cycle bottom. Holding my short position in the broad stock market.
Gold and silver prices have been very volatile this week. Both metals took a dive on Tuesday and Wednesday, but prices snapped back up to their Monday high levels today. We are now in the center of a strong reversal zone for the precious metals so we could still see new highs over the next several trading days that could signal a top and a significant (but short) correction back down. As I suggested in my last blog, our main strategy now will be to look to buy the bottom of such a correction as the overall trend in both metals could be turning quite bullish. On the sidelines of gold and silver for now.
Crude oil prices have now moved into our target range for a sub-cycle correction ($45 - $47 -Sept. contract chart). The cycle timing is also right for this type of corrective bottom (it is due this week). We are thus at a good entry point to buy crude. I am going to enter a long position in crude today. We can set an initial stop loss for this trade on a close below $45 tomorrow. If prices stay above $45 tomorrow, we will set our stop loss next week on prices breaking below this week's low.