A positive jobs report last Friday helped to propel the DOW to a new record high this week on Monday, but the market now seems to be falling from that high. I am anticipating a directional shift this week so this may be the start of it. Directional momentum is still mostly bullish in the broad stock market, and as long as it remains bullish I am still thinking that the major correction in this market (10% or more) will be in July. That said, we could still get a substantial dip now that could possibly reach the 16,200 area in the DOW. I would be looking to buy any such correction for a rally into July to a new high to sell short. My main strategy now is to focus on that peak in July for a substantial shorting opportunity, but we may also see a worthwhile short-term trade (up or down) before then. Stay tuned. Still on the sidelines of this market.
A major directional shift in precious metals could also occur this week, and since gold and silver prices have been rising, that directional shift would be back down. This reversal could start any day now, and I am waiting for any short-term sell signal that would indicate an opportunity to go short in these metals. Directional momentum remains mostly bearish in gold and silver which is supporting this idea of the precious metals moving down to a final bottom sometime in July. If gold continues to rally past this week and starts to exceed $1300, however, I will have to abandon that view and consider the possibility that the final cycle bottoms in gold and silver are already in. The main thing to keep in mind here is that we want to start buying gold and silver once we are reasonably certain of the final long-term cycle bottoms in both metals. Still on the sidelines but waiting to sell short, possibly within the next few days.
After a brief correction down last week, the U.S. Dollar Index is resuming its "breakout" behavior this week as it surged up and reached 80.9 yesterday. This bullish behavior of the dollar seems to be tempering the current rally in precious metals, but if the dollar now backs down a bit it could push gold and silver prices to an ideal spot to sell short within the next few days.
Crude oil prices made a new high and touched $105 yesterday, but cycle patterns are still unclear in this market. Directional momentum remains strongly bullish, but this market is overbought and due for some sort of correction.
Still on the sidelines here.