The broad stock market appears rather indecisive this week as to the direction in which it wants to move. After making new all-time highs early in the week, the DOW and S&P 500 have edged downwards a bit. The NASDAQ has remained below its June 9th all-time high and has been relatively flat this week. The next reversal zone for this market is June 28 - July 6. All three indices could still fall steeply into this time period (which would be ideal timing for a corrective bottom), but they seem reluctant to move down (which is not surprising as directional momentum in all three charts is still 100% bullish). If equities move lower into late next week and the July 4th holiday week-end, we will look for an opportunity to buy. But equity markets often rally into holiday week-ends so we may instead see this market push higher next week. In that case we will again look for a top to sell short as we are still expecting a significant correction (possibly 10% or more) to start from a high any time within the next several weeks. Still on the sidelines of the broad stock market.
Gold seems to have found some support just above $1240 (our stop loss point) early this week, and prices now appear to be rising. Any rally, however, may not get that far as next week (and the following week) could be a reversal zone for the precious metals. This means that any new high that forms next week through July 6 could be a pivot point for another downturn and correction. We currently have a long position in gold that we entered on June 16. Today's rally took gold back up to that entry point. Let's see if we can move higher at least into early next week before we sell that position. If we're lucky, this rally could take gold to the $1270 area where there is some resistance. If we get there next week, that may be a good spot to unload our longs. This week silver prices got a bit below our $16.50 target for a bottom, but now this metal also appears to be rallying. I am avoiding buying silver here because of the reversal zone coming up next week which could make any rally very short-term (we are generally not day traders). If we get a case of intermarket bearish divergence next week (or the following week) where gold or silver (but not both) make a new weekly high, we may consider going short in both metals. Holding my long position in gold but still out of silver.
Crude oil prices have now broken below the May 5th low of $44.45 (August contract chart) which most likely indicates that a long-term cycle is bottoming and prices will continue lower for at least 3 more weeks (possibly longer). The final cycle low could be in the $40 area. There are two reversal zones specifically related to crude coming up in July. That would be in the first week of July and the last two weeks of July. We will look for a good buying opportunity if prices get closer to $40 in either one of those time periods. Still on the sidelines of crude.