Today crude oil hit our target for a significant sub-cycle bottom (which was around $104 - Aug, contract chart). Prices dropped to $101 early in the day but then snapped back sharply and are closing near $106. This is bullish behavior. Our timing in crude's current medium-term cycle is also right for a sub-cycle bottom, and we are now near the center of a reversal zone specifically for crude (June 20-28). This looks like a good buy spot in crude for at least a short-term rally and possibly a longer-term surge up that could exceed the recent high at $120. We are entering a long position in crude oil today. We can set our initial stop loss for this trade on a weekly close below $100.
The broad stock market is rallying weakly today. There's a small possibility that last Friday's low in the DOW was the end of an old medium-term cycle and thus the start of a new one, but that seems unlikely for the S&P 500 and NASDAQ. It is more likely that all three indices are old cycles that are bottoming now and that this week's rally will roll over and head down below those lows from Friday for a final bottom to their medium-term cycles this week or next. We may consider buying that bottom if it approaches the targets I gave on Monday (around 28,500 - 29,300 in the DOW, 3,200-3,600 in the S&P 500, and 8,500-10,000 in the NASDAQ). Let's remain on the sidelines for now.
Gold prices were up just a bit and silver prices down a bit today. Both metals appear reluctant to rally which is supporting the idea that these are older cycles moving down to their final bottoms. (Even if they are newer, young cycles, the trend could be turning bearish.) We will hold our short positions in both metals for now. Our stop loss points for these positions are still at their recent highs ($1877 for gold and $22.49 for silver).
The U.S. Dollar Index recently started a new medium-term cycle and is looking quite bullish. After a corrective dip last week, the dollar seems to be leveling off around 104 and could be poised for another rally. If that rally can break above last week's high of 105.79, the greenback's trend would be very bullish. If this happens, it does not bode well for the precious metals as their prices usually move opposite the U.S. dollar. The Federal Reserve's aggressively hawkish tone over the last several weeks is also helping to boost this index as this may be perceived as the Fed being fiscally responsible.