The broad stock market continues to oscillate this week with large surges up and down, but so far it is not making much progress either way. While it is possible for this market to turn down any time now, cycle patterns suggest more rallying. There is a good chance we could see a top around March 7 so lets use that (for now) as our timing point to sell short. We will look for the S&P 500 to get between 1950 - 2000 around that time and for the DOW to reach the 16,800 - 17,200 area. Still on the sidelines of this market.
Gold and silver are still tricky to call, but it looks like a short-term correction is imminent in both metals and timing factors indicate a potential turning point from now through early next week. Technical analysis shows that gold could correct down to $1170 or even lower. COT (Commitment of Traders) charts are showing Commercial (i.e "smart money") short positions in gold to be at extremely high levels right now. This supports the argument for a correction.
Silver is down today and may already be starting its correction, but gold is up a bit and still not far from last week's high of $1263. I am going to enter a short position in gold today with a stop loss above that $1263 high. This stop is about 2% away from the current price which gives us a decent risk/reward ratio for the trade. Note that this is a short-term trade and that the overall longer-term trend of the precious metals market may be turning bullish. The depth of any correction now will tell us how bullish this market will be going forward into the rest of the year. As long as gold's low on Dec. 2 at $1046 and silver's low on Dec.14 at $13.14 aren't broken, it looks like new long-term cycles are starting in both metals. If that is the case then gold and silver should be bullish into 2017. Selling short gold today but staying out of silver.
Crude oil is following the broad stock market's gyrations (actually it is the other way around), but prices are staying above the low of Feb. 11 (now at $28.74 in the April contract chart) which keeps alive the idea that it was the medium-term cycle low and maybe even a longer-term cycle low. This would be bullish and would project a rally to $38 or higher. If the broad stock market rallies into next week we can expect crude prices to rise as well. Any move in crude below that Feb.11 low would negate our bullish strategy. Holding my long position in crude oil for now.