After falling steeply on Monday, the broad stock market may be finding some support now as we move into the end of the week. The DOW made a low at 15,340 yesterday and bullishly added 188 points today. We are at the center point of a strong reversal zone that ends early next week, so it is possible this market's correction is over and it is now starting to turn up. Arguing against this idea, however, is the fact that directional momentum in both the DOW and S&P 500 indices remains 100% bearish (although the NASDAQ continues to be mixed bullish and bearish and its refusal to turn fully bearish may indicate underlying strength in the market). Even though the DOW has found some support this week in the 15,400 area, the market's strong bearish momentum indicators could easily push this index below that level to form a new low by early next week. The U.S. employment report comes out tomorrow (Friday), and this may have some impact on the markets. The bottom line here is that the broad stock market could go either way right now. I would say that the technical signals are slightly favoring a deeper correction (which could possibly last into the end of the month), but we also can't rule out a bottom and a shift to a bullish trend by early next week. I am remaining on the sidelines until directional signals are more clear.
Gold and silver prices have been rising this week, but both are looking toppy and this week's reversal zone could push precious metal prices back down, especially as directional momentum in silver charts is still strongly bearish. An ideal buying setup now would be for silver to fall below $19 and gold to the $1220 area sometime before the end of next week. If that happens, I will be looking to go long in both metals. Currently on the sidelines of gold and silver.
Crude oil prices seem to be topping out at a major zone of resistance in the $99 - $100 area, and there are timing factors that suggest a significant reversal in this market now. Momentum, however, is still mixed bullish and bearish and I would like to see more bearish technical signals before selling this market short. The cycle picture in crude oil charts is still not clear, and, like the broad stock market, this market could be on the verge of turning longer term bullish or it could be headed back down for a deeper correction (well below $92). Despite this ambiguity, a significant short-term correction could be setting up now that would be worth trading. I will therefore be watching for the appropriate technical signals to sell short. Still out of this market.