MARKETS UPDATE (8:00 pm EDST)
It looks like last Friday's lows may have been a significant sub-cycle bottom for the broad stock market - at least for the DOW and S&P 500. The NASDAQ seems to be a little less bullish at the moment and looks like it could make a new low into our new strong reversal zone coming up this Thursday (May 26 - June 3). If it does that without the other two indices, we will have a strong intermarket bullish divergence signal. If that happens, we will consider buying the DOW or S&P 500 as there is a possibility these indices are just starting new medium-term cycles and could be at least short-term bullish. It is more clear, however, that the NASDAQ is an older cycle and is bearish. The top of any sub-cycle rally in the NASDAQ should probably be sold short as the final bottom to this cycle is due in 5-13 weeks. For that matter, even a bullish rally in the DOW and S&P 500 would probably fall short of making new all-time highs and would turn bearish early in the new cycles. We are still on the sidelines of this market.
Gold and silver prices are edging higher this week. If they can reach our target zones (around $1900 in gold and $23 - $24 in silver) for a sub-cycle top soon, we will consider going short in both metals because both gold and silver most likely started new medium-term cycles on March 29. They have now fallen below those starting points and are therefore bearish and headed down.
Wednesday-Thursday could be a turning point for gold (and it is the start of our new general reversal zone, May 26 - June 3). That would be a good time for a top (as well as all of next week as we have another reversal zone specifically for the precious metals from May 27- June 6). Let's see how high prices can get in these time frames. Still on the sidelines of gold and silver.
The U.S. Dollar Index continues to fall, which is in line with our idea that the dollar's medium-term cycle is now correcting down to its final bottom which is due (overdue) anytime now (it could happen in our upcoming reversal zone May 26 - June 3). Any falling in the dollar now will help boost a rally in the precious metals, but once the greenback finds its bottom, it will rally again and likely turn gold and silver prices back down.
Crude oil prices seem to be stabilizing around $110 (July contract chart). We are now at the center of a new reversal zone specifically for crude (May 19 - 27). Last Thursday's low (May 19) at $103.24 may have been a significant low and turning point, but if prices make a new high by Friday, that could also qualify as a significant top ready to turn back down. I've been avoiding trading this market as the "wild card" factor of the ongoing Russia/Ukraine war makes crude potentially very volatile. Nevertheless, a clear break and close above $115 could be a very bullish signal and the start of a rally that could go as high as $150. Also, any significant correction that stays above $94 could be a good spot to go long as the overall trend of this market is bullish. For now, we will remain on the sidelines of crude.
It looks like last Friday's lows may have been a significant sub-cycle bottom for the broad stock market - at least for the DOW and S&P 500. The NASDAQ seems to be a little less bullish at the moment and looks like it could make a new low into our new strong reversal zone coming up this Thursday (May 26 - June 3). If it does that without the other two indices, we will have a strong intermarket bullish divergence signal. If that happens, we will consider buying the DOW or S&P 500 as there is a possibility these indices are just starting new medium-term cycles and could be at least short-term bullish. It is more clear, however, that the NASDAQ is an older cycle and is bearish. The top of any sub-cycle rally in the NASDAQ should probably be sold short as the final bottom to this cycle is due in 5-13 weeks. For that matter, even a bullish rally in the DOW and S&P 500 would probably fall short of making new all-time highs and would turn bearish early in the new cycles. We are still on the sidelines of this market.
Gold and silver prices are edging higher this week. If they can reach our target zones (around $1900 in gold and $23 - $24 in silver) for a sub-cycle top soon, we will consider going short in both metals because both gold and silver most likely started new medium-term cycles on March 29. They have now fallen below those starting points and are therefore bearish and headed down.
Wednesday-Thursday could be a turning point for gold (and it is the start of our new general reversal zone, May 26 - June 3). That would be a good time for a top (as well as all of next week as we have another reversal zone specifically for the precious metals from May 27- June 6). Let's see how high prices can get in these time frames. Still on the sidelines of gold and silver.
The U.S. Dollar Index continues to fall, which is in line with our idea that the dollar's medium-term cycle is now correcting down to its final bottom which is due (overdue) anytime now (it could happen in our upcoming reversal zone May 26 - June 3). Any falling in the dollar now will help boost a rally in the precious metals, but once the greenback finds its bottom, it will rally again and likely turn gold and silver prices back down.
Crude oil prices seem to be stabilizing around $110 (July contract chart). We are now at the center of a new reversal zone specifically for crude (May 19 - 27). Last Thursday's low (May 19) at $103.24 may have been a significant low and turning point, but if prices make a new high by Friday, that could also qualify as a significant top ready to turn back down. I've been avoiding trading this market as the "wild card" factor of the ongoing Russia/Ukraine war makes crude potentially very volatile. Nevertheless, a clear break and close above $115 could be a very bullish signal and the start of a rally that could go as high as $150. Also, any significant correction that stays above $94 could be a good spot to go long as the overall trend of this market is bullish. For now, we will remain on the sidelines of crude.
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