It looks like all three of our broad stock market indices have more or less completed their medium-term mid-cycle "dips". The NASDAQ's sharp 5-day drop last week that broke well below the 15-day moving average was a legitimate sub-cycle correction. The S&P 500's 5-day drop was not as steep or deep, but still qualifies as a sub-cycle. The DOW's 4-day "dip" barely tested its 15-day moving average, and one could argue that this buoyant index is heading straight to its medium-term cycle top with no sub-cycle corrections (very bullish).
The DOW made a new weekly and all-time high today. The S&P 500 also made a new weekly high, and it is just 20 points away from exceeding its all-time high (4819 from Jan. 2022). The NASDAQ, however, did not make a new weekly high today (it is close), and it is still a good distance away (about 1000 points) from its all-time high of 16,212 from Nov. 2021. Thus we still have strong bearish divergence signals in place that could lead to a more severe turn down in this market. We are now in the center of a relatively weak general reversal zone (Jan. 8 - 16), so another reversal back down is possible; however, this market seems to have a lot of bullish energy, and both the DOW and S&P 500 are breaking above last week's highs which suggests their trend is still pointed up. A very strong reversal zone is coming up in two weeks (Jan. 23 - Feb. 1). We could see this market continue its rally into that time frame, but then we'll have to watch for a top - possibly the final top in the current medium-term cycle - followed by a steep correction down to the cycle's final bottom. We're staying on the sidelines of this market until we see a more significant corrective drop.
Gold and silver are both making new weekly lows today (negating the bullish divergence signal from earlier this week), and silver is testing its previous sub-cycle low ($22.52 on Dec. 13). Could these metals now be headed down to their final medium-term cycle bottoms? Yes, but we note a strong potential "pivot point" for both gold and silver coming up tomorrow through next Tuesday. Prices could snap back up from any new lows in this window, at least temporarily. We are still staying on the sidelines of both metals until we see the current medium-term cycles complete their final bottoms. Gold's bottom could happen anytime starting next week through the end of February. Silver's bottom is due anytime starting this week through the end of February.
Crude oil prices have remained relatively flat this week as they continue to test both the 14-day and 45-day moving averages but remain below both of them. These two averages are converging with both sloping down as they approach the strong $70 support line. Crude prices have been stuck in a congestion zone between these moving averages (now at $73.80 and $72.68) and the $70 support and should soon break out one way or the other. We abandoned our long crude position on Tuesday to avoid a potential break below $70 (and especially $67.98) and are now on the sidelines of crude. There is a reversal zone specifically for crude coming up Jan. 23 - Feb. 1 (it overlaps with the strong general reversal zone mentioned above for equities). If prices do break lower, we might see a significant bottom in that time frame and another opportunity to go long.