As we enter the center of this week's reversal zone for the broad stock market (which could extend into the middle of next week), none of the three major market indices (DOW, S&P 500 and NASDAQ) seem to be making a significant high or low. All three did make a new weekly high yesterday, but because it was all three, there was no intermarket bearish divergence signal which we like to see before a significant reversal down. Yet, this market also seems reluctant to rally strongly. Nervousness over how markets will react to the results of the current U.S. presidential election, one of the strangest and most controversial in recent history, is likely responsible for the indecisiveness in equities now, and that may persist up until election day (Nov. 8th). There is still time (over the next five trading days) for these indices to move higher before reversing down, but if yesterday's highs were it, we could see equities fall into election day and even beyond to complete a final medium-term cycle bottom over the next several weeks. Directional momentum remains mixed bullish and bearish in all three market indices. I am going to remain on the sidelines here until I see more decisive directional signals.
Gold and silver prices have been rallying a bit this week. There is a very strong reversal zone for gold coming up on Thursday and Friday. If gold can rally to the $1,280 area over the next few days, we will consider selling it short. As I mentioned in earlier blogs, it is now looking like both gold and silver are late in their medium-term cycles. If this is correct then they are due to make their final cycle bottoms soon. If and when this happens, we will look to buy. Directional momentum in both metals is currently 100% bearish. On the sidelines of gold and silver for now,
It looks like last Wednesday's high in crude oil ($52.22 - December contract chart) did (slightly) exceed the high from Oct. 20 so that was likely the crest of the current subcycle. Prices are now falling to a subcycle bottom which could easily be in this week's reversal zone. A good target price would be in the $47 - $48 area. Let's see if prices can get there over the next few days. If they do, it may be a good spot to buy again. On the sidelines of crude for now.