The S&P 500 seems to be making a high in our strong reversal zone, so, as with the NASDAQ, any traders long in this index should probably take profits now and get out. Any traders holding long positions in the DOW can stay long. We note that the DOW is rallying a bit, but it could also make a new low tomorrow or into early next week and still form a significant sub-cycle bottom (good buy spot). Traders that are out of the broad stock market should remain on the sidelines.
We are breaking below the stop loss point I suggested for gold on Monday ($1970) today, but I am going to hold my long position for now and lower that stop loss point down to $1900. Why? Both gold and silver are now clearly taking sharp sub-cycle corrective dips into the dead center of a reversal zone specifically for the precious metals (May 15 - 24), and the timing in both cycles is now ideal for a bottom to form (this week or next). There is some support for gold at $1950, but even $1900 would be an acceptable target for a correction. After this bottom, we expect gold to rally sharply again and challenge or exceed the May 4 high at $2059.
A good corrective target range for silver now would be $22.50 - $24. We are already in the upper part of that range, but prices could go lower over the next several trading days into next week. We are looking to buy this low because silver still has the potential to rally back up to $30. Both gold and silver are potentially very bullish now, but gold needs to start breaking above $2070 to confirm this. We will stay on the sidelines of silver for today.
The U.S. Dollar Index has been rising, but it is now approaching a resistance line around 104, and we are now in the center of a reversal zone specifically for currencies (May 15 - 23). This means a reversal back down could be imminent, and that could help turn precious metal prices back up.