All three of our broad stock market indices (DOW, S&P 500, NASDAQ) are making new weekly highs this week. That reinforces the idea that they are relatively young medium-term cycles (as I suggested in my last blog). The NASDAQ is still below its all-time high of 14,167 from February, however, which does give us a bearish divergence signal as the DOW and S&P 500 continue to make new all-time highs this week. Could equities top out and roll over here? Yes, that is possible, but we are still not inside a major reversal zone, and that is what we like to see at a major turning point in the cycle. We may get a sharp sub-cycle corrective dip as the timing is right for that, but I don't think the cycle will turn bearish as long as the DOW stays above 32,000 (and especially 30,000) and the S&P 500 remains above 3,800. We also don't want to see the NASDAQ fall below 12,397 as that would be a bearish sign. I am still anticipating a significant top in these indices in our next reversal zone coming up April 20 - 29 which could turn out to be an ideal spot to sell this market short. For now, we will remain on the sidelines and keep an eye on the depth of any corrective dips.
Gold is rallying a bit so far this week, but it needs to go above $1754 to start looking bullish and possibly like a new medium-term cycle that could have started on March 8. Otherwise, we will assume this is an older cycle that is about to drop lower to its final cycle bottom below $1677. A good time for that bottom would be in the upcoming reversal zone for the precious metals April 22 - 30. If that happens, it would be a good spot to buy. Silver could also be an older cycle ready to bottom, but it needs to break below last week's low ($23.80) to verify that bearish view. If instead prices continue to rally strongly, we may have to label that low as the start of a new cycle, which would be very bullish. Let's stay on the sidelines of both metals for now.
It's possible crude oil started a new medium-term cycle with its March 23 low of $57.25 (May contract chart)...BUT...prices have not been rallying this week as they should if this were a new cycle. We enter a reversal zone tomorrow (April 7 - 16) specifically relevant to crude. This suggests that crude's cycle may not be new and could instead be an older cycle about to complete a bottom in this reversal zone. If prices fall back to $57,25 or go lower, that would probably be the case, and we may see a good opportunity to buy, We remain on the sidelines for now.