After yesterday's plummet, the broad stock market is bouncing back strongly today. That one day "dip" was not a significant sub-cycle correction, so we will continue to wait for one as a possible buy spot to get in on what could be a significant rally into September. The NASDAQ continues to push above its early June highs, but the S&P 500 and DOW are still below their June highs (the S&P 500 is getting close). Thus we still have a strong intermarket bearish divergence signal as we near the center of our current strong reversal zone (Aug. 1 - 11). A top and more significant correction in these indices could be imminent. We are on the sidelines for now.
Gold and silver prices have been dropping a bit this week, but not by much, which is good for our long position in gold. We have been out of silver because there is a possibility of it dropping below its low of $18.15 on July 15 - if it is an old cycle. If July 15 was the start of a new medium-term cycle then that will not happen, and prices will rally. I'm starting to think this is a new cycle. If so, we will wait for the first significant sub-cycle correction - above $18.15 - for a possible spot to buy (there is one due starting next week). We are holding our long position in gold and are staying on the sidelines of silver for now.
In Monday's blog on crude oil I wrote:
"There's a chance that the low of $88.23 on July 14 was already the start of a new medium-term cycle, but that was a little early (and not in a reversal zone). It's more likely the bottom is going to form in this new reversal zone at a lower price (or maybe a double-bottom near $88). A good target for a bottom is still around $85, and that may be a good place to buy over the next week or two."
We now move into the center of this new reversal zone (Aug. 1 - 11). Crude prices are falling steeply and are now approaching that $88 low. We will be watching for a low to buy this week or next, hopefully near our $85 target (Sept.contract chart). For now, we remain on the sidelines.