The broad stock market is having a roller coaster week with large moves both up and down. All three of our market indices (DOW, S&P 500, NASDAQ), however, are staying above their Jan. 24 lows, and today is the last day of our current reversal zone. This market could turn up now (with Tuesday's lows being a significant bottom in our reversal zone), but there is another general reversal zone coming up next week (March 15 - 24), so another deeper low in that time frame is not out of the question. Even if the market rises now, this new reversal zone could put a damper on any rally and turn it back down. Thus, our view of this market is still bearish. Let's continue to hold our short NASDAQ position until we see more bullish technical signals.
Both gold and silver are backing down a bit from dramatic highs they made on Tuesday. Gold actually challenged its Aug. 2020 all-time high of $2070 (it got to $2066 on Tuesday, which could end up being a "double-top" to the long-term 23-year cycle). On Tuesday Silver made a new high for 2022 at $26.83, but that was still well below the Aug. 2020 and Feb. 2021 peaks where silver was a hair's breath away from $30. This sets up a strong bearish divergence between the two metals. Tuesday's highs were in the center of our general reversal zone, so that could be a significant top. But we are entering a new general reversal zone next week (as stated above) as well as a reversal zone specifically for gold and silver from March 16 - 24 (same time frame as the general reversal zone). If prices fall into the new reversal zones, we may have a set-up to buy. On the other hand, if gold or silver make new highs next week, it may be an opportunity to sell short. Needless to say, we need to be cautious and careful with all trading now as current global geopolitical instability is creating high volatility in all financial markets.
If the stock market continues to tank, we could still see a sharp surge in precious metals with a potential "blow-off" top in the 23-year long-term cycle in gold, which could exceed the all-time high of $2070. On the other hand, the 23-year cycle top may already be in, and gold and silver prices could fall now. (Remember how precious metals fell WITH the stock market crash in 2008-2009?) Even if we get a "blow-off" price surge in gold, blow-off tops are always followed by steep plunges - and this one would be very steep as it would be the end of a long-term 23 year cycle. The bottom of that cycle is due around 2023 - 2024. Please see my recent GOLD Update on the Home Page.
We remain on the sidelines of gold and silver for now.
Speaking of "blow-off" tops, crude oil prices accelerated up rapidly last week and made a new 10-year high this week on Monday at $130 (April contract chart). From there, prices plunged back down, and they hit $103 yesterday. These dramatic price moves have obviously been triggered by the Russia/Ukraine war crisis. As this crisis continues, we may see more price surges and plunges. It is not a safe environment for trading. If prices lower a bit more and stabilize, we may consider buying as the longer-term cycles in this market still look bullish. We will remain on the sidelines for now.