MARKETS UPDATE (2:30 pm EST)
The broad stock market continues to demonstrate an amazing buoyancy and a reluctance to take any significant correction (so far). According to our normal cycle analysis, the final bottoms to the current medium-term cycles in all three market indices (DOW, S&P 500, NASDAQ) would be due by the end of next week, but that would require a very steep fall, especially for the S&P 500 which is making yet another new all-time high today. Still, it could happen, but these cycles could also expand a bit and bottom in late March, or even early April. Usually a final corrective drop lasts 2-5 weeks. There is a new, fairly strong general reversal zone coming up March 14 - 22. The last half of that reversal zone is two weeks from now, so a final bottom could happen then.
Today the S&P 500 is making a new weekly (all-time) high while the DOW and NASDAQ are not, so we have yet another bearish divergence signal. The DOW's last high was on Feb. 23, so it is already 2 weeks into a corrective dip. The NASDAQ's most recent high was last Friday, so it has been down just one week (and it has been rising back up sharply and could exceed Friday's high any day now). We are presently inside a weak reversal zone, and today and tomorrow are potentially very strong "pivot points" for equities. What all of this means is that a steep downturn in this market could (should) be imminent, with a final bottom to the correction likely by March 22. A good target for the bottom could still be around 37,000 in the DOW. We'll remain on the sidelines as we wait for the final bottoms in these current medium-term cycles.
The rally in precious metal prices continues today as gold makes a new all-time high and silver breaks above a resistance line at $24. This rally has been very steep, and both metals may take a "breather" dip soon. We are already long in silver, and we may use any significant dips in gold as an opportunity to buy. It is early in these new medium-term cycles, and the current trend is bullish. For now, we remain long in silver and on the sidelines of gold.
Crude oil prices have been down from the high of $80.85 (April contract chart) on March 1, but they seem to be finding support at the 15-day moving average (now at $78.22 and rising slowly). If $80.85 was a sub-cycle high, prices should move lower to a sub-cycle bottom, and that could be a good entry point to buy. A reversal zone specifically for crude ends next Wednesday, so there is still time for a higher high before a significant correction. Alternatively, a deeper correction into Wednesday might give us a good buying opportunity. We remain on the sidelines for now.
The broad stock market continues to demonstrate an amazing buoyancy and a reluctance to take any significant correction (so far). According to our normal cycle analysis, the final bottoms to the current medium-term cycles in all three market indices (DOW, S&P 500, NASDAQ) would be due by the end of next week, but that would require a very steep fall, especially for the S&P 500 which is making yet another new all-time high today. Still, it could happen, but these cycles could also expand a bit and bottom in late March, or even early April. Usually a final corrective drop lasts 2-5 weeks. There is a new, fairly strong general reversal zone coming up March 14 - 22. The last half of that reversal zone is two weeks from now, so a final bottom could happen then.
Today the S&P 500 is making a new weekly (all-time) high while the DOW and NASDAQ are not, so we have yet another bearish divergence signal. The DOW's last high was on Feb. 23, so it is already 2 weeks into a corrective dip. The NASDAQ's most recent high was last Friday, so it has been down just one week (and it has been rising back up sharply and could exceed Friday's high any day now). We are presently inside a weak reversal zone, and today and tomorrow are potentially very strong "pivot points" for equities. What all of this means is that a steep downturn in this market could (should) be imminent, with a final bottom to the correction likely by March 22. A good target for the bottom could still be around 37,000 in the DOW. We'll remain on the sidelines as we wait for the final bottoms in these current medium-term cycles.
The rally in precious metal prices continues today as gold makes a new all-time high and silver breaks above a resistance line at $24. This rally has been very steep, and both metals may take a "breather" dip soon. We are already long in silver, and we may use any significant dips in gold as an opportunity to buy. It is early in these new medium-term cycles, and the current trend is bullish. For now, we remain long in silver and on the sidelines of gold.
Crude oil prices have been down from the high of $80.85 (April contract chart) on March 1, but they seem to be finding support at the 15-day moving average (now at $78.22 and rising slowly). If $80.85 was a sub-cycle high, prices should move lower to a sub-cycle bottom, and that could be a good entry point to buy. A reversal zone specifically for crude ends next Wednesday, so there is still time for a higher high before a significant correction. Alternatively, a deeper correction into Wednesday might give us a good buying opportunity. We remain on the sidelines for now.
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