Let me repeat my statement on the broad stock market from April 7 that I posted last Thursday:
"We are now pretty certain that all three of our broad stock market indices (DOW, S&P 500, NASDAQ) are new (young) medium-term cycles that started with the Feb. 24 lows of the DOW and S&P 500, and the Feb. 24 and March 14 (double-bottom) lows in the NASDAQ. Because these cycles are in their early stage, they could be quite bullish now and ready to rally and test new all-time highs. But there's also a chance they could peak early and then turn down dramatically for a long bearish ride down to their final bottoms."
It's looking like the possibility of peaking early could be valid as all three of our indices (DOW, S&P 500, and NASDAQ) are falling steeply this week and are now retesting their Feb. 24 lows.
I also wrote on Thursday:
"My thoughts here are that these sub-cycle corrections want to go lower, perhaps into our rather weak reversal zone coming up next week (April 26 - May 8). If they do go lower, we may get another opportunity to buy for a potential rally to challenge the all-time highs over the next several weeks. But if these indices fall below their Feb. 24 lows, that would be bearish, and we would probably be on track for a much deeper correction."
We are now entering that reversal zone (April 26 - May 4), and the market is indeed falling strongly into it. Yesterday the NASDAQ closed below its "double-bottom" lows of 12,598 from Feb. 24 and 12,555 from March 14 (the close was 12,490). That is a bearish sign. However, the DOW closed at 33,239 and the S&P 500 closed at 4,175, both significantly ABOVE their Feb. 24 lows. This gives us a strong BULLISH divergence signal as we enter this new reversal zone. That means a significant sub-cycle bottom could be forming here with a new rally about to start. If these indices stabilize over the next several days and maintain their bearish divergence, we might consider going long for another rally to challenge this market's all-time highs. But if the market continues to fall (especially past next Wednesday), and the DOW and S&P 500 also break below their Feb. 24 lows (that would be 32,383 and 4,116 in the DOW and S&P 500, respectively), then we will abandon any short-term bullish strategy and instead start to focus on short-selling this market again. We are still on the sidelines of this market.
Silver prices fell steeply last week, and now silver is well below its March 29 low of $24. This means that silver is approaching the end and bottom of an older medium-term cycle (likely), or it could be falling below the start of a new medium-term cycle that started March 29 (less likely). If the latter is true, then silver is turning VERY bearish. For now, we will assume a final bottom is forming to an older cycle. Our original target for that bottom was $22.50 - $23. Prices aren't quite there yet. We have a new reversal zone specifically for the precious metals coming up next week (May 4 - 12), so that could be a good time for the final cycle bottom. Let's see if prices can get closer to our target range in that time frame. If they do, it might be a good spot to buy.
Gold prices have also been falling, and they are now testing the $1892 low of March 29. This brings into question the idea that March 29 was the start of a new medium-term cycle. If it is a new cycle, and prices break lower, that would mean that the cycle is turning bearish. But if prices go lower, it could also mean the cycle is older and headed towards its final bottom, due anytime over the next 3 weeks. As with silver, we will wait to see how prices move into next week's reversal zone which could be a major turning point for both metals.
We will remain on the sidelines of gold and silver for now.
The U.S. Dollar Index continues to push higher, despite the fact that it is very late in its current medium-term cycle. A top in this cycle is due anytime now to be followed by a sharp correction down. It could happen in this week's general (but weak) reversal zone, but there is another reversal zone specifically for currencies coming up next week (May 5 - 13). That would be a better time for a final cycle top. (If a top happens this week, that reversal zone could end up being the time frame for the final cycle bottom instead.) Any sharp correction down in the greenback could trigger a sharp rally in the precious metals, so we will keep an eye out for that possibility.
It is very likely crude oil began a new medium-term cycle with its low of $92.60 on April 11 (June contract chart). That would make it young and potentially very bullish now and ready to rally strongly. It did rally strongly from that $92.60 low, but it backed down a bit last week and has been stabilizing above a downward sloping trend-line that comes in around $96 today. There is a new reversal zone specifically for crude April 26 - May 4 (same as for the broad stock market). We entered that yesterday, so we could see an isolated low form near that trend-line soon that could be a good spot to buy. We will watch for that now. We are still on the sidelines of crude oil.