The broad stock market has been relatively flat and stable (so far) this week, but momentum may be turning down today. Not one of our three indices (DOW, S&P 500, NASDAQ) has made a new weekly high, and we still have an intermarket bearish divergence signal carrying over from last week (when the S&P 500 and NASDAQ exceeded their Dec. 13 highs and the DOW did not). It is late in the medium-term cycles of these indices, so a final top could happen anytime now. We are now out of our weak reversal zone (although there may be a "pivot point" for this market today and tomorrow), but there is another weak reversal zone coming up next week (Feb. 13 - 21). This market could make a significant high or low then - it is unclear at the moment which is more likely. Any high could be a shorting opportunity, but any low might be a good place to buy (as long as it isn't TOO low). We will stay on the sidelines for now.
Over the last three days gold and silver prices have been flat, but today they are moving down, and both are breaking below their lows from last week. A sub-cycle bottom is overdue in gold, and a final medium-term full cycle bottom is overdue in silver. We are expecting gold's bottom to be between its 15-day and 45-day day moving averages. Right now, the 15-day average ($1910) is above the 45-day average ($1863), and prices are testing the lower one. We want to see silver's bottom in the $20 - $22 range, and today silver is breaking slightly below $22. It would be nice to have a bullish divergence signal at these bottoms (i.e. gold or silver making a new low without the other), but we're not going to get that this week (both are making new lows). We are not in any reversal zone this week, but next week we have that weak reversal zone mentioned above as well as possible "pivot points" for gold on Monday, and for gold and silver on Tuesday - Wednesday. Let's watch for these bottoms in those time frames with a possible bullish divergence signal and perhaps an opportunity to buy both metals. We will remain on the sidelines of gold and silver for now.
The U.S. Dollar Index is now about to leave a reversal zone specifically for currencies (Feb. 1 - 9). The dollar made a significant low Feb. 2 at 100.82 and then rallied strongly. That was probably the reversal, but the greenback has been falling a bit from a high it made on Monday (103.96). That could also be a reversal if downward momentum accelerates from here. My guess is that it won't, or if it does, the dollar won't break below 100.82. If the dollar can rally some more into next week's weak reversal zone, it might help push gold and silver to their final lows. Then a subsequent corrective dip in the dollar could drive another (possibly short-term, but possibly steep) rally in these metals. I am speculating here, of course, but it seems like a plausible scenario that we will look for.
Crude oil prices have been rising steeply this week after making a deep low at $72.25 (March contract chart) on Monday. Today prices were testing the 15-day moving average (after breaking through the 45-day moving average yesterday). If prices start backing down again, we could see an older medium-term cycle move to its final bottom (below $70.56) over the next several weeks. That would be my preferred scenario as it would also most likely correspond to a 3-year cycle bottom and a very good spot to buy. However, if prices break that 15-day moving average and keep rising, we will have to consider the idea of a new medium-term cycle starting from the Dec. 9 low at 71.48, especially if prices start closing above $82.66. We are staying on the sidelines of crude for now.