MARKETS UPDATE (11:30 pm EDT)
Our cycle analysis of the broad stock market is currently very ambiguous with several possible labels for the medium-term cycles. Our most likely labeling places the start of the current medium-term cycles in all three indices (DOW, S&P 500, NASDAQ) on the lows of Jan. 13. In that labeling, all three indices have turned bearish as they have fallen well below their starting points. Significant sub-cycle lows were seen on March 13 (DOW and S&P 500) and March 11 (NASDAQ). An 8 - 9 day rally followed those lows, but it didn't get very far before the market turned sharply down again.
Today's market sell-off (triggered by President Trump's tariff announcement) hurled these indices below the March 13 lows which further confirms the bearish trend in the current medium-term cycles. So what does this all mean?
It means that these indices will fall lower until they reach the end of their medium-term cycles 2 - 12 weeks from now. Target prices for the cycle bottoms could be around 39,000 in the DOW and 5,200 for the S&P 500. (We are not too far from those levels, so we may see the end of these cycles sooner rather than later.) It's too late to short sell this market, so we will now wait for the final medium-term cycle bottoms for a possible spot to buy.
The big question now is whether or not President Trump's tariffs will scare equities into a MAJOR longer-term sell-off. Today's plunge was severe, but recently Wall Street has been able to recover quickly from bad news. We shall have to wait and see how this plays out. We are still on the sidelines of this market.
Not surprisingly, the panic sell-off in the broad stock market triggered an equally dramatic plunge in crude oil prices. Crude's medium-term cycle analysis was showing that a sub-cycle correction was imminent as prices were rising steeply into a resistance line around $72 (May contract chart) and we entered a general reversal zone (April 1 - April 8). I wrote in my blog last Thursday:
"Crude is in a new medium-term cycle that began with the low of $64.85 early this month (March 5), and that low was also most likely the start of a longer-term (2 year) cycle. So far, this cycle looks bullish...Crude may be approaching a sub-cycle top and getting ready to take its first cycle correction. If this new cycle is indeed bullish, I plan on riding out any modest correction and staying long for at least several more weeks."
Because this market's trend was bullish, I had planned to ride out any "minor" correction, but the tariff announcement has caused more than a minor dip. Crude dropped from yesterday's high near $72 to close today near $67. This puts us on alert for a more severe correction, but there is a support line at $66, and until prices break below the start of this cycle ($64.85), I am going to hold my long position in crude.
Gold edged up to a new all-time high today ($3164), but it may be topping out and ready to roll over soon as we are in the center of a reversal zone. It is unclear at the moment if gold's current medium-term cycle is young or old, but either way, some sort of correction looks imminent, and we will wait for it before considering any trade.
Unlike gold, today silver prices plummeted. It is late in silver's medium-term cycle, so this metal may be dropping into its final cycle bottom now. We should keep an eye out for a good buy spot which may come this week or next.
We are currently on the sidelines of both gold and silver.
Our cycle analysis of the broad stock market is currently very ambiguous with several possible labels for the medium-term cycles. Our most likely labeling places the start of the current medium-term cycles in all three indices (DOW, S&P 500, NASDAQ) on the lows of Jan. 13. In that labeling, all three indices have turned bearish as they have fallen well below their starting points. Significant sub-cycle lows were seen on March 13 (DOW and S&P 500) and March 11 (NASDAQ). An 8 - 9 day rally followed those lows, but it didn't get very far before the market turned sharply down again.
Today's market sell-off (triggered by President Trump's tariff announcement) hurled these indices below the March 13 lows which further confirms the bearish trend in the current medium-term cycles. So what does this all mean?
It means that these indices will fall lower until they reach the end of their medium-term cycles 2 - 12 weeks from now. Target prices for the cycle bottoms could be around 39,000 in the DOW and 5,200 for the S&P 500. (We are not too far from those levels, so we may see the end of these cycles sooner rather than later.) It's too late to short sell this market, so we will now wait for the final medium-term cycle bottoms for a possible spot to buy.
The big question now is whether or not President Trump's tariffs will scare equities into a MAJOR longer-term sell-off. Today's plunge was severe, but recently Wall Street has been able to recover quickly from bad news. We shall have to wait and see how this plays out. We are still on the sidelines of this market.
Not surprisingly, the panic sell-off in the broad stock market triggered an equally dramatic plunge in crude oil prices. Crude's medium-term cycle analysis was showing that a sub-cycle correction was imminent as prices were rising steeply into a resistance line around $72 (May contract chart) and we entered a general reversal zone (April 1 - April 8). I wrote in my blog last Thursday:
"Crude is in a new medium-term cycle that began with the low of $64.85 early this month (March 5), and that low was also most likely the start of a longer-term (2 year) cycle. So far, this cycle looks bullish...Crude may be approaching a sub-cycle top and getting ready to take its first cycle correction. If this new cycle is indeed bullish, I plan on riding out any modest correction and staying long for at least several more weeks."
Because this market's trend was bullish, I had planned to ride out any "minor" correction, but the tariff announcement has caused more than a minor dip. Crude dropped from yesterday's high near $72 to close today near $67. This puts us on alert for a more severe correction, but there is a support line at $66, and until prices break below the start of this cycle ($64.85), I am going to hold my long position in crude.
Gold edged up to a new all-time high today ($3164), but it may be topping out and ready to roll over soon as we are in the center of a reversal zone. It is unclear at the moment if gold's current medium-term cycle is young or old, but either way, some sort of correction looks imminent, and we will wait for it before considering any trade.
Unlike gold, today silver prices plummeted. It is late in silver's medium-term cycle, so this metal may be dropping into its final cycle bottom now. We should keep an eye out for a good buy spot which may come this week or next.
We are currently on the sidelines of both gold and silver.
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