The broad stock market has been rallying this week, and all three indices (DOW, S&P 500, NASDAQ) are making new weekly highs which negates our bearish divergence signal from Monday. We are not in a reversal zone this week, but we enter a big one next week (June 8 - 30). This makes me think the market will rally a bit more to form a top in the early part of that reversal. If I'm wrong, and the market turns south now, we may see a corrective low instead in that early reversal period. Either way, we will wait for the reversal period before considering any trade, long or short. Still on the sidelines of this market.
Gold and silver are still tricky to call right now. Both prices are falling, and gold seems to be testing the $1700 level successfully, BUT there are other technical factors that are still bearish. We are in the center of a reversal zone specifically for the precious metals (June 1 - 9) so we could see gold turn up here. Silver, however, is still above our ideal target for a bottom (around $17). I am not comfortable going long now, especially considering we enter that other major reversal zone next week (which could also affect these metals). We'll remain on the sidelines of gold and silver for now.
In my last update on the U.S. Dollar Index (May 26), I wrote:
"...the dollar broke below a support level around 99. This could be the start of at least a short-term downturn in the greenback."
That's turning out to be the case as the dollar has fallen significantly since then. But the greenback is now approaching a support level around 96 which may halt the fall, at least temporarily. If that 96 area holds into next week's reversal zone, we may also see some sort of rebound. Of course, that may not be good for gold and silver prices so we will keep a sharp eye on that 96 support, especially next week.
Crude oil prices have been edging up this week and are very close to $40 (June contract chart) which may offer some resistance now. (There is a considerable band of resistance form $40 - $45.) There is a reversal zone coming up next week specifically for crude (June 9 -17). I am going to wait to see if that will correspond to a new high (perhaps in that $40 - $45 range) or a corrective low (assuming crude starts to fall now). We will consider trading then (from either a top or bottom). Still on the sidelines of crude oil.