The end of week surge in the broad stock market last week did not touch our stop loss points (24,859 in the DOW and 2,718 in the S&P 500 - both significant peaks from April 17 and 18), and that rally may be turning down now. Ideally, we would like to see this market continue down into one of this month's two reversal zones (one centered on May 11 and the other on May 31) to complete the current medium-term cycle, but until last week's lows are taken out (and especially the lows of April 2), we can't rule out more rallying. (Today the DOW did break below its low from last week, but the S&P 500 and NASDAQ did not. This creates a bullish divergence signal until these latter two indices break their lows.) We continue to hold our short position in the broad stock market with stop losses at those April 17 and 18 highs.
The bullish dollar rally (see yesterday's blog) continues today as the U.S. Dollar Index breaks through another resistance level at 92. Not surprisingly, gold and silver prices are edging lower with directional momentum in both metals now turning 100% bearish. It looks like we may be on track for new lows into next week's reversal zone for the precious metals. If so, we may look to buy gold as it could be completing the bottom of an older medium-term cycle. (Silver started a new medium-term cycle on March 20 and is still "young".) We are on the sidelines of both gold and silver for now.
Crude oil prices are down today. Despite a brief surge to $69.34 (June contract chart) in yesterday's trading, the April 19 high of $69.55 remains the high for the current medium-term cycle so far. I think that high will be exceeded, but first we may see a correction into the $64 - $66 area. If that happens in next week's reversal zone, we may look to buy. Currently out of crude oil.