As I anticipated, the broad stock market is backing down a bit after yesterday's post Trump speech rally, but not by much. The DOW seems to be holding above that psychologically significant 21,000 level it broke through yesterday, yet it seems reluctant to rally. In yesterday's blog I described the cycle and timing factors that point to an imminent reversal. We need to see a top by next Wednesday, however; otherwise the rally could continue into early April as a potential "blow-off" top. Some risk adverse traders who were not stopped out of their short position yesterday may wish to take advantage of today's dip to cover their short position now. I am going to hold my short position today with the idea that yesterday may have been the top. If this market pushes higher into early next week with intermarket bearish divergence between the DOW, S&P 500 and NASDAQ (i.e. one or two, but not all three indices making new highs) that may also be a good time to sell short. Holding my short position in the broad stock market for now.
The precious metals market is still ambiguous and is giving mixed signals for trading. Gold and silver have been down this week, but we are still in a strong reversal zone so prices may find a bottom by early next week. The U.S. Dollar Index appears to be breaking to the upside, but it is surging strongly into a reversal zone and its direction could also change abruptly by next week. This could affect precious metal prices. Still on the sidelines of gold and silver.
Our decision to sell our long position in crude oil on Tuesday seems to be a good one as crude prices fell steeply today. We may consider going long again early next week as that is also another reversal zone specifically for crude. On the sidelines of crude oil.