MARKETS UPDATE (5:00 pm EDT)
The DOW, S&P 500, and NASDAQ are now 4 weeks past their first sub-cycle lows from late May and should be making another significant sub-cycle low soon (these are sub-cycles within the longer medium-term cycles which started on April 17 in the DOW and April 19 in the S&P 500 and NASDAQ). We have now entered another strong reversal zone for all markets (June 26 - July 5). This means we could see a significant high or a significant low (or both) anytime through the end of next week that would be followed by a significant correction down or up.
Right now this market looks short-term bullish, and the S&P 500 and NASDAQ are close to making new all-time highs. The DOW, however, seems more reluctant to rally and is still well below it's recent all-time high of 40,077 from May 20. This means we still have a strong bearish divergence signal in this market. If the S&P 500 and/or NASDAQ edge a bit higher and make new all-time highs inside the current reversal zone and the DOW remains below 40,077, we will have a strong set-up for a significant correction down. An alternative (less likely) scenario could see these indices falling from their current levels and making a significant low sometime next week from which another rally would follow. We are remaining on the sidelines of the broad stock market until the medium-term cycle trend (bullish or bearish) becomes more clear.
Gold and silver prices have been down, but gold prices remain above the $2287 low from June 7, which we identified as the start of a new medium-term cycle. We will stay with that idea for now, but we note that silver is breaking slightly below its low from June 13, which we had also labeled the start of a new medium-term cycle. Gold is most likely making a "double-bottom" in our current reversal zone, but since gold is not making a new low, we also have a case of intermarket bullish divergence to silver. A rally in both metals should be imminent as they are most likely starting new medium-term cycles with these bottoms. We are still holding our long position in gold and remaining on the sidelines of silver.
The U.S. Dollar Index has been rising, but it is encountering strong resistance just above 106. A significant high may be imminent inside our new reversal zone with a correction to follow. If that happens, it could kick-start a rally in the precious metals.
Crude oil prices rose steeply last week, but they are encountering strong resistance this week at the $82 level (Aug. contract chart). We are nearing the center of our current reversal zone (which applies strongly to crude), so it seems likely a high and correction down could be imminent here as well. We will probably be looking to buy the bottom of any significant sub-cycle correction as this market seems poised to rally higher into the end of the year. For now, we remain on the sidelines of crude.
The DOW, S&P 500, and NASDAQ are now 4 weeks past their first sub-cycle lows from late May and should be making another significant sub-cycle low soon (these are sub-cycles within the longer medium-term cycles which started on April 17 in the DOW and April 19 in the S&P 500 and NASDAQ). We have now entered another strong reversal zone for all markets (June 26 - July 5). This means we could see a significant high or a significant low (or both) anytime through the end of next week that would be followed by a significant correction down or up.
Right now this market looks short-term bullish, and the S&P 500 and NASDAQ are close to making new all-time highs. The DOW, however, seems more reluctant to rally and is still well below it's recent all-time high of 40,077 from May 20. This means we still have a strong bearish divergence signal in this market. If the S&P 500 and/or NASDAQ edge a bit higher and make new all-time highs inside the current reversal zone and the DOW remains below 40,077, we will have a strong set-up for a significant correction down. An alternative (less likely) scenario could see these indices falling from their current levels and making a significant low sometime next week from which another rally would follow. We are remaining on the sidelines of the broad stock market until the medium-term cycle trend (bullish or bearish) becomes more clear.
Gold and silver prices have been down, but gold prices remain above the $2287 low from June 7, which we identified as the start of a new medium-term cycle. We will stay with that idea for now, but we note that silver is breaking slightly below its low from June 13, which we had also labeled the start of a new medium-term cycle. Gold is most likely making a "double-bottom" in our current reversal zone, but since gold is not making a new low, we also have a case of intermarket bullish divergence to silver. A rally in both metals should be imminent as they are most likely starting new medium-term cycles with these bottoms. We are still holding our long position in gold and remaining on the sidelines of silver.
The U.S. Dollar Index has been rising, but it is encountering strong resistance just above 106. A significant high may be imminent inside our new reversal zone with a correction to follow. If that happens, it could kick-start a rally in the precious metals.
Crude oil prices rose steeply last week, but they are encountering strong resistance this week at the $82 level (Aug. contract chart). We are nearing the center of our current reversal zone (which applies strongly to crude), so it seems likely a high and correction down could be imminent here as well. We will probably be looking to buy the bottom of any significant sub-cycle correction as this market seems poised to rally higher into the end of the year. For now, we remain on the sidelines of crude.
RSS Feed