We are now near our first "pivot point" (Dec. 3) in our new moderately strong (but wide) reversal zone Nov. 30 - Dec. 15. (The other "pivot point" is Dec. 10). After yesterday's late day plunge, the broad stock market seems to be bouncing back today with a strong rally. This could be our pivot point reversal, especially since the S&P 500 has reached our downside target line near 4,500, and the NASDAQ is now well inside our downside target range of 15,000 - 15,500. The DOW has plunged through several target support zones, but may now be stabilizing just above 34,000. If this index starts closing below 33,613, however, that would be a very bearish sign that might signal a serious sell-off. Let's see if today's bullish rise can pick up steam for a "Santa Claus" rally and top into the Christmas/New Year holidays. We're not going to chase such a rally, but instead we will be looking to sell short near the top. If this market starts collapsing now, we may be looking to sell short even sooner. We're staying on the sidelines for now.
Crude oil prices fell to $62.43 (Jan. 2022 contract chart) today but then bounced and recovered strongly to close near $67. As I have stated in my previous blogs, if prices start closing below $62, crude could turn very bearish. We are now near the center of a reversal zone specifically for crude (Nov. 30 - Dec. 8), so today's bounce from that low could be the start of a rally. I am not going to buy here, however, because it is a little too early for a final bottom in crude's current medium-term cycle, and any rally now will probably be short-lived and will not make a new cycle high before turning down and moving to a final cycle bottom. I think we will wait for that final cycle bottom before considering any long position in crude. We are on the sidelines of crude.
Gold prices moved lower today which is suggesting it is bypassing a potential rally and will be heading down some more. Gold's medium-term cycle is very old and ready to bottom. That could be happening now, but the technical signals for a strong rally are weakening, so I am reluctant to call the bottom here.
Silver's medium-term cycle is much younger than gold's, and silver is now taking a major sub-cycle corrective drop near the center of its cycle. As with gold, the technical signals that we had for a strong reversal earlier in the week are weakening, so we could see prices push lower. A normal corrective drop here could get as low as $22, and we are almost there, so even though we COULD see a bounce here, there are enough mixed technical signals to keep me from buying. If prices fall below $21.44, silver could turn very bearish.
Let's remain on the sidelines of both silver and gold for now.