MARKETS UPDATE (11:33 pm EST)
The amazingly bullish broad stock market continues to push the limits for a final top in its current medium-term cycle. The DOW and S&P 500 had been falling from their Feb. 12 highs which had looked like the overdue final tops in their current medium-term cycles, but today both indices made "gap-ups" above those highs to new all-time highs. We note, however, that even though the NASDAQ also made a significant "gap-up", it did not get above its Feb. 12 high (yet). Even more significantly, the NASDAQ still has not broken above its all-time high (16,212) from Nov. 2021 (although it is very close to doing that if it continues to rally). This means we still have a strong bearish divergence signal between these indices, and it is happening as we approach the center of a very strong reversal zone (February 19 - 29). It is also VERY late in the current medium-term cycles of all three indices, so a final top to these cycles is due (overdue). So despite today's rally, a final top and sharp correction down could still be imminent.
What makes today's rally so bullish is that the "gap-ups" in both the S&P 500 and NASDAQ created a "bullish island reversal" pattern in their charts which means this rally could continue into next week. If that happens, we note that our strong reversal zone continues into next Thursday, so there is still time for a final top to form inside it.
The final BOTTOMS to the current medium-term cycles in all three indices would normally be expected anytime now over the next three to six weeks with the most likely time being in mid-March. We will keep that in mind as we wait for a significant correction into those final bottoms. We remain on the sidelines of this market for now.
As I pointed out in last Thursday's blog on gold and silver, it's possible that gold and/or silver made final medium-term cycle bottoms with their lows on Feb. 14 ($1986 in gold and $21.94 in silver). The only problem with that is Feb. 14 was not in any reversal zone, and we generally like to see significant bottoms (and tops) happen inside a (preferably) strong reversal zone. Gold has been rallying strongly since Feb.14, but prices seem to be floundering now near the 15-day and 45-day moving averages. If this is still an older medium-term cycle (i.e. not a new one starting from Feb. 14), then the final cycle bottom is due by next week - below $1986. A final bottom next week would be ideal because we are currently inside a reversal zone specifically for precious metals (Feb. 21 - 29) that is overlapping with another strong general reversal zone for all markets (Feb. 19 - 29). Furthermore, next Monday is a strong potential "pivot point" for silver, and Tuesday is a strong potential "pivot point" for gold.
Silver rallied a bit more aggressively than gold from its Feb. 14 low ($21.94), but it too is now encountering some resistance around its 45-day moving average. While gold is making a new weekly high today, silver prices have been falling since last Friday's high, so we have bearish divergence between the metals which suggests they both could fall lower. If this is an older medium-term cycle in sliver, its final bottom, like gold, is due by next week. We will stay on the sidelines of both metals for now as we wait to see if prices can move lower into next week. We are still looking to buy both metals near their final medium-term cycle bottoms.
Crude oil prices continue to edge higher as they test the Jan. 29 high of $79.09 (we are now switching to the April contract chart). Because we are now approaching the center of a very strong general reversal zone, any new isolated high could become a top followed by a significant correction down. We still don't know if the current medium-term cycle is new (i.e. started on Dec.13) and bullish or an old one (started back on Oct. 6, 2023) that will fall to a final cycle bottom below $68.47 due by the end of this month. If a top forms this week or next, we will wait to see how far any corrective drop will go. A correction that holds above $70 would suggest a new cycle is in place, whereas an older cycle would likely break below $68. For now, we remain on the sidelines of crude oil, but we still anticipate buying at the bottom of any significant sub-cycle correction.
The amazingly bullish broad stock market continues to push the limits for a final top in its current medium-term cycle. The DOW and S&P 500 had been falling from their Feb. 12 highs which had looked like the overdue final tops in their current medium-term cycles, but today both indices made "gap-ups" above those highs to new all-time highs. We note, however, that even though the NASDAQ also made a significant "gap-up", it did not get above its Feb. 12 high (yet). Even more significantly, the NASDAQ still has not broken above its all-time high (16,212) from Nov. 2021 (although it is very close to doing that if it continues to rally). This means we still have a strong bearish divergence signal between these indices, and it is happening as we approach the center of a very strong reversal zone (February 19 - 29). It is also VERY late in the current medium-term cycles of all three indices, so a final top to these cycles is due (overdue). So despite today's rally, a final top and sharp correction down could still be imminent.
What makes today's rally so bullish is that the "gap-ups" in both the S&P 500 and NASDAQ created a "bullish island reversal" pattern in their charts which means this rally could continue into next week. If that happens, we note that our strong reversal zone continues into next Thursday, so there is still time for a final top to form inside it.
The final BOTTOMS to the current medium-term cycles in all three indices would normally be expected anytime now over the next three to six weeks with the most likely time being in mid-March. We will keep that in mind as we wait for a significant correction into those final bottoms. We remain on the sidelines of this market for now.
As I pointed out in last Thursday's blog on gold and silver, it's possible that gold and/or silver made final medium-term cycle bottoms with their lows on Feb. 14 ($1986 in gold and $21.94 in silver). The only problem with that is Feb. 14 was not in any reversal zone, and we generally like to see significant bottoms (and tops) happen inside a (preferably) strong reversal zone. Gold has been rallying strongly since Feb.14, but prices seem to be floundering now near the 15-day and 45-day moving averages. If this is still an older medium-term cycle (i.e. not a new one starting from Feb. 14), then the final cycle bottom is due by next week - below $1986. A final bottom next week would be ideal because we are currently inside a reversal zone specifically for precious metals (Feb. 21 - 29) that is overlapping with another strong general reversal zone for all markets (Feb. 19 - 29). Furthermore, next Monday is a strong potential "pivot point" for silver, and Tuesday is a strong potential "pivot point" for gold.
Silver rallied a bit more aggressively than gold from its Feb. 14 low ($21.94), but it too is now encountering some resistance around its 45-day moving average. While gold is making a new weekly high today, silver prices have been falling since last Friday's high, so we have bearish divergence between the metals which suggests they both could fall lower. If this is an older medium-term cycle in sliver, its final bottom, like gold, is due by next week. We will stay on the sidelines of both metals for now as we wait to see if prices can move lower into next week. We are still looking to buy both metals near their final medium-term cycle bottoms.
Crude oil prices continue to edge higher as they test the Jan. 29 high of $79.09 (we are now switching to the April contract chart). Because we are now approaching the center of a very strong general reversal zone, any new isolated high could become a top followed by a significant correction down. We still don't know if the current medium-term cycle is new (i.e. started on Dec.13) and bullish or an old one (started back on Oct. 6, 2023) that will fall to a final cycle bottom below $68.47 due by the end of this month. If a top forms this week or next, we will wait to see how far any corrective drop will go. A correction that holds above $70 would suggest a new cycle is in place, whereas an older cycle would likely break below $68. For now, we remain on the sidelines of crude oil, but we still anticipate buying at the bottom of any significant sub-cycle correction.
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