MARKETS UPDATE (11:30 pm EDT)
The broad stock market may at last be taking its final corrective drop to the final medium-term cycle bottom in all three of our indices (DOW, S&P 500, NASDAQ). Today the DOW plunged nearly 400 points to close below its 15-day moving average. The NASDAQ also closed below its 15-day moving average with a 156 point drop. The S&P 500 broke (but did not close) below its 15-day moving average and lost 38 points.
The final corrective drop in a medium-term cycle usually lasts 2 - 5 weeks, but since this one is late, it may not last that long. The DOW has already fallen almost 2 weeks from its 39,889 isolated high on March 21. Ditto for the NASDAQ's March 21 high at 16,539. The S&P 500, however, is only down 2 trading days from its isolated high (5,265) from last Thursday. Clearly, all three could fall some more. As I suggested in my last blog, a final bottom could happen in a rather weak general reversal zone (April 1 -10) this week or next, but a better time for the medium-term cycle bottom would be near the end of this month inside a much stronger reversal zone (April 22 - May 3). We are looking to buy at this bottom (as long as it doesn't go too low) as we anticipate another strong rally into the summer. We remain on the sidelines of the broad stock market for now.
Gold and especially silver prices rallied strongly today. Gold has little resistance encumbering it now as it rises steeply to new all-time highs; however, our estimated target range for the top of the current medium-term cycle (which began Feb. 14) would be $2300 - $2400, and we are close to the bottom of that range now. As we are in a weak reversal zone this week, we could see a pullback from any isolated highs. On the other hand, it's still early in this cycle and the trend is bullish, so prices could push higher. Let's hold our long position in gold for now.
Silver's current medium-term cycle also began on Feb. 14. Prices rose sharply from there to $25.74 on March 21, and then the cycle took its first sub-cycle dip to $24.34 six days later. Prices have now risen sharply from that low, and today they surged dramatically and surpassed the March 21 high, closing just above $26. This demonstrates a bullish trend, but as with gold's cycle, another pullback could be imminent. If prices push higher tomorrow, we may look to take profits in our long position. We remain long in silver for now.
In last Thursday's blog on crude oil I wrote:
"...the sub-cycle labeling of the current medium-term cycle is a little unclear. But we know the cycle is old and near completion, so a final top is imminent and will be followed by a final sharp correction down to the cycle bottom. That bottom is due anytime now by mid-May. Because the final corrective drop should take 2 - 5 weeks, the final top cannot be far away. We may even see it this week as today and Friday defines a potentially strong "pivot point" for this market (and others). Also, next week we enter another (somewhat weak) general reversal zone (April 1 - 10). After that, we don't have any reversal zones until the last week of April (April 22 - May 3, a very strong reversal). Based on all this, a likely scenario could see a final top in crude this week or next followed by a sharp correction down into a final bottom in late April/early May. Crude still looks very bullish into the end of this year, so we will be looking to buy this current medium-term cycle bottom, wherever it ends up landing."
It looks like prices want to push higher into this week's reversal zone. We have a strong potential "pivot point" for crude tomorrow and Thursday (which is also near the center of our reversal zone) as prices approach possible resistance at $86 (May contract chart). A final top and reversal could be imminent. If it happens, we will be looking to buy the bottom of the correction. We are still on the sidelines of this market.
The broad stock market may at last be taking its final corrective drop to the final medium-term cycle bottom in all three of our indices (DOW, S&P 500, NASDAQ). Today the DOW plunged nearly 400 points to close below its 15-day moving average. The NASDAQ also closed below its 15-day moving average with a 156 point drop. The S&P 500 broke (but did not close) below its 15-day moving average and lost 38 points.
The final corrective drop in a medium-term cycle usually lasts 2 - 5 weeks, but since this one is late, it may not last that long. The DOW has already fallen almost 2 weeks from its 39,889 isolated high on March 21. Ditto for the NASDAQ's March 21 high at 16,539. The S&P 500, however, is only down 2 trading days from its isolated high (5,265) from last Thursday. Clearly, all three could fall some more. As I suggested in my last blog, a final bottom could happen in a rather weak general reversal zone (April 1 -10) this week or next, but a better time for the medium-term cycle bottom would be near the end of this month inside a much stronger reversal zone (April 22 - May 3). We are looking to buy at this bottom (as long as it doesn't go too low) as we anticipate another strong rally into the summer. We remain on the sidelines of the broad stock market for now.
Gold and especially silver prices rallied strongly today. Gold has little resistance encumbering it now as it rises steeply to new all-time highs; however, our estimated target range for the top of the current medium-term cycle (which began Feb. 14) would be $2300 - $2400, and we are close to the bottom of that range now. As we are in a weak reversal zone this week, we could see a pullback from any isolated highs. On the other hand, it's still early in this cycle and the trend is bullish, so prices could push higher. Let's hold our long position in gold for now.
Silver's current medium-term cycle also began on Feb. 14. Prices rose sharply from there to $25.74 on March 21, and then the cycle took its first sub-cycle dip to $24.34 six days later. Prices have now risen sharply from that low, and today they surged dramatically and surpassed the March 21 high, closing just above $26. This demonstrates a bullish trend, but as with gold's cycle, another pullback could be imminent. If prices push higher tomorrow, we may look to take profits in our long position. We remain long in silver for now.
In last Thursday's blog on crude oil I wrote:
"...the sub-cycle labeling of the current medium-term cycle is a little unclear. But we know the cycle is old and near completion, so a final top is imminent and will be followed by a final sharp correction down to the cycle bottom. That bottom is due anytime now by mid-May. Because the final corrective drop should take 2 - 5 weeks, the final top cannot be far away. We may even see it this week as today and Friday defines a potentially strong "pivot point" for this market (and others). Also, next week we enter another (somewhat weak) general reversal zone (April 1 - 10). After that, we don't have any reversal zones until the last week of April (April 22 - May 3, a very strong reversal). Based on all this, a likely scenario could see a final top in crude this week or next followed by a sharp correction down into a final bottom in late April/early May. Crude still looks very bullish into the end of this year, so we will be looking to buy this current medium-term cycle bottom, wherever it ends up landing."
It looks like prices want to push higher into this week's reversal zone. We have a strong potential "pivot point" for crude tomorrow and Thursday (which is also near the center of our reversal zone) as prices approach possible resistance at $86 (May contract chart). A final top and reversal could be imminent. If it happens, we will be looking to buy the bottom of the correction. We are still on the sidelines of this market.
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