MARKETS UPDATE (6:00 pm EST)
All three of our broad stock market indices (DOW, S&P 500, NASDAQ) made new weekly highs last Friday and are now falling (slightly) from there. Those highs could have been the final tops in the medium-term cycles of all three indices (it was in the center of our current strong reversal zone and the tops are overdue), but this market seems reluctant to fall. Our current reversal zone is in place through Thursday, or even Friday, so there's still time for one, two, or all three indices to push up a bit higher to a new top. (If just one or two make a new high, it would give us a nice bearish divergence signal).
Whether the tops were last Friday or they happen this week, we are expecting a sharp correction down to the final medium-term cycle bottoms in all three indices soon. It is late in these current medium-term cycles, and they have been unusually bullish, but a 2-5 week decline to a final cycle bottom is now due (overdue). We note that the NASDAQ's high last Friday (16,132) did not exceed its all-time high from November 2021 (16,212), so we still have a bearish divergence signal in this market (as the DOW and S&P 500 continue to make new all-time highs). We will remain on the sidelines of this market as we wait for a significant corrective drop to the final medium-term cycle bottoms in all three indices.
We are now in the center of a reversal zone specifically for precious metals (Feb. 21 - 29) that is overlapping with our strong general reversal zone for all markets (Feb. 19 - March 1). Today and tomorrow are also potential "pivot points" for gold. Gold prices went up last week as silver prices fell lower, which is a little unusual as both metals usually move in tandem. This has created a situation where silver is making a low and gold is making a high in the center of these reversal zones. So far, gold has not yet made a new high this week, but silver is making new weekly lows, which technically may be giving us a bullish divergence signal.
It's still not clear whether or not gold and/or silver started new medium-term cycles with their lows on Feb. 14 ($1986 in gold and $21.95 in silver). If they didn't, and we are still looking at older cycles, then those cycles are technically due to end this week with their final bottoms below $1986 in gold and below $22 in silver. There are still three days left in our reversal zones for that to happen. If it doesn't happen and prices rally up, we will have to favor the idea of new cycles starting on Feb. 14. The short-term direction of this market is unclear now as we remain on the sidelines.of both gold and silver.
The U.S. Dollar Index has been falling, and we now enter another reversal zone specifically for currencies (Feb. 28 - March 7). If the dollar turns back up from an isolated low in this time frame, it could push precious metal prices down. We will watch this carefully in conjunction with gold and silver.
Today crude oil prices jumped up to test the $79.09 (April contract chart) high from Jan. 29. Besides being inside our strong general reversal zone, we are also inside an unusually long reversal zone specifically for crude (Feb. 21 - March 13), so a top and significant correction down could happen anytime now. Today's high exceeded last week's highs, so a top could be imminent.
In last Thursday's blog on crude oil I wrote:
"We still don't know if the current medium-term cycle is new (i.e. started on Dec.13) and bullish or an old one (started back on Oct. 6, 2023) that will fall to a final cycle bottom below $68.47 due by the end of this month. If a top forms this week or next, we will wait to see how far any corrective drop will go. A correction that holds above $70 would suggest a new cycle is in place, whereas an older cycle would likely break below $68."
All of this still applies as we wait for a corrective drop and see how far it goes. In the meantime, we remain on the sidelines of crude oil.
All three of our broad stock market indices (DOW, S&P 500, NASDAQ) made new weekly highs last Friday and are now falling (slightly) from there. Those highs could have been the final tops in the medium-term cycles of all three indices (it was in the center of our current strong reversal zone and the tops are overdue), but this market seems reluctant to fall. Our current reversal zone is in place through Thursday, or even Friday, so there's still time for one, two, or all three indices to push up a bit higher to a new top. (If just one or two make a new high, it would give us a nice bearish divergence signal).
Whether the tops were last Friday or they happen this week, we are expecting a sharp correction down to the final medium-term cycle bottoms in all three indices soon. It is late in these current medium-term cycles, and they have been unusually bullish, but a 2-5 week decline to a final cycle bottom is now due (overdue). We note that the NASDAQ's high last Friday (16,132) did not exceed its all-time high from November 2021 (16,212), so we still have a bearish divergence signal in this market (as the DOW and S&P 500 continue to make new all-time highs). We will remain on the sidelines of this market as we wait for a significant corrective drop to the final medium-term cycle bottoms in all three indices.
We are now in the center of a reversal zone specifically for precious metals (Feb. 21 - 29) that is overlapping with our strong general reversal zone for all markets (Feb. 19 - March 1). Today and tomorrow are also potential "pivot points" for gold. Gold prices went up last week as silver prices fell lower, which is a little unusual as both metals usually move in tandem. This has created a situation where silver is making a low and gold is making a high in the center of these reversal zones. So far, gold has not yet made a new high this week, but silver is making new weekly lows, which technically may be giving us a bullish divergence signal.
It's still not clear whether or not gold and/or silver started new medium-term cycles with their lows on Feb. 14 ($1986 in gold and $21.95 in silver). If they didn't, and we are still looking at older cycles, then those cycles are technically due to end this week with their final bottoms below $1986 in gold and below $22 in silver. There are still three days left in our reversal zones for that to happen. If it doesn't happen and prices rally up, we will have to favor the idea of new cycles starting on Feb. 14. The short-term direction of this market is unclear now as we remain on the sidelines.of both gold and silver.
The U.S. Dollar Index has been falling, and we now enter another reversal zone specifically for currencies (Feb. 28 - March 7). If the dollar turns back up from an isolated low in this time frame, it could push precious metal prices down. We will watch this carefully in conjunction with gold and silver.
Today crude oil prices jumped up to test the $79.09 (April contract chart) high from Jan. 29. Besides being inside our strong general reversal zone, we are also inside an unusually long reversal zone specifically for crude (Feb. 21 - March 13), so a top and significant correction down could happen anytime now. Today's high exceeded last week's highs, so a top could be imminent.
In last Thursday's blog on crude oil I wrote:
"We still don't know if the current medium-term cycle is new (i.e. started on Dec.13) and bullish or an old one (started back on Oct. 6, 2023) that will fall to a final cycle bottom below $68.47 due by the end of this month. If a top forms this week or next, we will wait to see how far any corrective drop will go. A correction that holds above $70 would suggest a new cycle is in place, whereas an older cycle would likely break below $68."
All of this still applies as we wait for a corrective drop and see how far it goes. In the meantime, we remain on the sidelines of crude oil.
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