We are now approaching the middle of this week's reversal zone, and it looks like equity markets have found more bullish energy and are rising into it. (I suspected this would happen which is why I covered my DOW short position over a week ago.) Today the DOW made a new all-time high while the S&P 500 and NASDAQ did not (although the NASDAQ 100 INDEX December contract chart did make a new all-time high) so we are getting bearish divergence in this reversal zone which means we should be looking for a top to sell short. The projected target for this top in the DOW is around 27,500, and there are cycle factors pointing to Friday (Oct. 5) as a likely turning point for a reversal. The DOW is currently at 26,774. I would like to see it at least near 27,000 and a little closer to Oct. 5 before selling short. Let's see if it rallies a bit more tomorrow. We may enter a short position in the broad stock market either tomorrow or Thursday unless the S&P 500 makes a new high. Currently on the sidelines.
In last week's blog on gold and silver I wrote:
"If gold breaks below $1161 while silver stays above $13.95 or if gold stays above $1161 while silver breaks below $13.95, we will have an ideal set-up to go long again in both metals next week."
So far that hasn't happened and both metals rallied today; however, silver rallied to a new weekly (and monthly) high while gold did not (bearish divergence in a reversal zone), and silver closed well below its high so it's still possible for one or both of these metals to make new lows by next Monday. A sign that the cycle lows are in and the market is turning bullish would be to see gold close above $1213 (and especially $1220). We are looking to go long in both metals soon, but let's stay on the sidelines for now.
Crude oil is also rising into the current reversal zone and made a new high nearly touching $76 today. It is late in the current medium-term cycle in crude, and a final top is due (overdue) any time now. If crude falls sharply from today's high, it will have time to make a sub-cycle low this week from which another rally may commence to new highs. If prices instead edge higher over the next few days, we will assume the final cycle high is forming and will look to sell short. On the sidelines of crude for now.