The broad stock market continues to look "toppy" while the DOW remains below its Dec. 31st all-time high of 16,588. The S&P 500 and the NASDAQ did break to new yearly highs last week, so this case of intermarket bearish divergence persists. We move out of a likely timing zone for a reversal in this market tomorrow, so if the market is going to turn down it should do so now. Today's 44 point drop in the DOW may be the start of this correction. As I stated last week, the stop loss for our short positions here will be when the DOW breaks clearly above that 16,588 high. Cycle studies indicate that this market's current cycle is nearing completion and could form a bottom anytime now. From a technical standpoint, a good time for this bottom would be close to Jan. 31. However, If the DOW does break to new highs and continues to rally, then the end of this month could instead correspond to a top in the market from which a correction begins. We will have to wait and see how this plays out. Presently maintaining a short position in this market.
Crude oil rose today and broke just over $95 but then closed just below that price. As I mentioned in my last blog, there is now resistance in the $95 - $96 area, and this serves as a good stop loss zone for our current short position in this market. Momentum remains strongly bearish, but we need to see prices start to fall now or there is a risk of further rallying into the end of the month (the next strong reversal zone). Holding a short position in this market.
Gold and silver prices fell today but they may be setting up for a strong bounce from the $1220 area in gold and the $19 area in silver by the end of the month. If that scenario unfolds, it will be a good point to go long in silver. I am already long in gold. A good stop loss zone for gold would be from $1180 - $1200. Currently long in gold but out of silver.