Today equity markets seem to be snapping back from yesterday's down-slope, but we note that the DOW made a new weekly low yesterday along with the S&P 500 and NASDAQ, so the intermarket bullish divergence signal from earlier in the week has been negated. We are in the center of a general reversal zone (April 4 - 20), but it is a wide one and will last through Wednesday of next week. This market could turn back up now, but it would be better to see another low early next week with another bearish divergence signal. The hard reality of record inflation and the ongoing Russia/Ukraine conflict is undoubtedly weighing heavily on the minds of traders/investors and could trigger more selling. Let's remain on the sidelines of the broad stock market for now.
Gold may have started a new medium-term cycle (likely) on March 29 at $1892, but there's a chance it could still be completing and older medium-term cycle with its final low due anytime now over the next few weeks (below $1892). Even if gold is a new, young cycle, there's a good chance it will peak early and turn bearish. We are therefore looking to sell short any significant top that forms now, regardless of which cycle (old or new) is playing out. It would take a break and close above the March 8 high of $2066 to negate this bearish view. We are currently in the center of a reversal zone specifically for gold and silver (April 12 - 20), and both metals are rising into it. Gold continues to make new weekly highs above its March 24 high, but silver is still just below its March 24 high. Thus we still have a bearish divergence signal. I am going to refrain from selling short right now with the idea that silver may negate that bearish divergence signal tomorrow or Friday. If gold is a new, young cycle, I would also like to see it push a little higher before turning down.
Silver is likely completing an older medium-term cycle that is due for its final bottom anytime over the next three weeks. But yes, it's also possible that silver, like gold, could have started a new cycle with its low of $24 on March 29. Unlike gold, however, if silver IS a new, young cycle, it is probably very bullish and won't necessarily top out early (like gold). This possibility makes me even more reluctant to go short in silver at the moment. If silver's bearish divergence to gold (see discussion of gold above) persists this week, or if we get another bearish divergence signal early next week with the price remaining below $26.83, I will consider going short.
We are staying on the sidelines of both gold and silver for now.
We are now nearing the end of a reversal zone specifically for crude oil (April 7 - 15). There is a good chance that crude ended its old medium-term cycle and began a new one with Monday's low of $92.93 (May contract chart) - a bullish "double-bottom" to the $92.20 low on March 15. These lows are significantly above our target for a cycle bottom ($85 - $90), but that could be expected if this market is very bullish (which it appears to be). There is still time for crude to fall lower Thursday and Friday, but prices seem to be taking off and confirming Monday as the cycle bottom. If crude has a weekly close above $105, it will probably confirm the start of a new cycle and give us good reason to go long in crude. We will remain on the sidelines for now.