MARKETS UPDATE (5:00 pm EDT)
The broad stock market's current short-term trend (bullish or bearish) is still not clear. We are now two days out of our last strong reversal zone, and both the S&P 500 and NASDAQ are making new all-time highs while the DOW remains well below its all-time high of 40,077 from May 20. While the S&P 500 and NASDAQ seem to be "breaking out" instead of reversing, we still have a strong bearish divergence signal between these indices which could turn this market down anytime.
We have a new strong general reversal zone coming up next week (June 26 - July 5). If these indices can rally a bit more into the end of next week, we could see a significant top then (or in the first week of July) and then a significant correction down. If that happens with new all-time highs in the S&P 500 and NASDAQ but with the DOW unable to exceed 40,077, this market could quickly turn bearish. But if all three indices make new all-time highs in that reversal zone, then equity markets could still be bullish into late summer. The DOW seems to be struggling to break above its 15-day and 45-day moving averages, so I am leaning towards a bearish view of this market at the moment. That could change, however, over the next two weeks. We are staying on the sidelines of this uncertain market for now.
Gold and silver also seem reluctant to rally strongly at the moment. But gold is remaining above its isolated low of $2287 from June 7, and silver is staying above its isolated low of $28.72 on June 13 (both lows were inside a strong reversal zone). Those lows are still good candidates for the starting points of new medium-term cycles in both metals. If the old cycles are still in place, however, its possible one or both metals could make a new low in the new upcoming reversal zone (June 26 - July 5). We are betting that gold's low is in with the long position we entered last Thursday. Let's hold that position in gold as we stay on the sidelines of silver for now.
Crude oil prices have now broken clearly and strongly above their 45-day moving average and also above a strong resistance line at $80. It seems likely the low of June 4 at $72.48 (July contract chart) was the start of a new medium-term cycle. It's a little late to be chasing this steep rally, so we will wait for a significant sub-cycle correction for a better spot to buy. We might not have to wait long for this as we could see a significant top in our next reversal zone which starts on Wednesday next week. We are currently on the sidelines of crude oil.
The broad stock market's current short-term trend (bullish or bearish) is still not clear. We are now two days out of our last strong reversal zone, and both the S&P 500 and NASDAQ are making new all-time highs while the DOW remains well below its all-time high of 40,077 from May 20. While the S&P 500 and NASDAQ seem to be "breaking out" instead of reversing, we still have a strong bearish divergence signal between these indices which could turn this market down anytime.
We have a new strong general reversal zone coming up next week (June 26 - July 5). If these indices can rally a bit more into the end of next week, we could see a significant top then (or in the first week of July) and then a significant correction down. If that happens with new all-time highs in the S&P 500 and NASDAQ but with the DOW unable to exceed 40,077, this market could quickly turn bearish. But if all three indices make new all-time highs in that reversal zone, then equity markets could still be bullish into late summer. The DOW seems to be struggling to break above its 15-day and 45-day moving averages, so I am leaning towards a bearish view of this market at the moment. That could change, however, over the next two weeks. We are staying on the sidelines of this uncertain market for now.
Gold and silver also seem reluctant to rally strongly at the moment. But gold is remaining above its isolated low of $2287 from June 7, and silver is staying above its isolated low of $28.72 on June 13 (both lows were inside a strong reversal zone). Those lows are still good candidates for the starting points of new medium-term cycles in both metals. If the old cycles are still in place, however, its possible one or both metals could make a new low in the new upcoming reversal zone (June 26 - July 5). We are betting that gold's low is in with the long position we entered last Thursday. Let's hold that position in gold as we stay on the sidelines of silver for now.
Crude oil prices have now broken clearly and strongly above their 45-day moving average and also above a strong resistance line at $80. It seems likely the low of June 4 at $72.48 (July contract chart) was the start of a new medium-term cycle. It's a little late to be chasing this steep rally, so we will wait for a significant sub-cycle correction for a better spot to buy. We might not have to wait long for this as we could see a significant top in our next reversal zone which starts on Wednesday next week. We are currently on the sidelines of crude oil.
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