There are some technical studies that point to higher than normal market volatility now through the end of this month as well as a possible major turning point possible around June 23rd (which is also the center point of one of our reversal zones this month). We should keep this in mind in planning any trading strategy.
We are still watching for a significant top in the broad stock market to sell short soon. The NASDAQ has been rallying strongly this week, but the DOW and S&P 500 not so much. Both the NASDAQ and S&P 500 have made new weekly highs this week, but the DOW has not (so far). All three indices have not yet exceeded their all-time highs from April (NASDAQ) and May (DOW and S&P 500), but the S&P 500 is VERY close, and the DOW and NASDAQ are also approaching the vicinity of those highs. We are about to enter a very long reversal zone for most markets tomorrow (June 10 - July 7). This reversal zone actually consists of two reversal zones that are back to back. Likely pivot points for any reversals would be close to June 23 and July 5, but significant tops (or bottoms) could occur anywhere within this time frame.
Ideally, I would like to see one or two of these indices (probably the DOW and/or S&P 500) make a new all-time high in this new reversal zone with the NASDAQ not exceeding its all-time high. That would give us a strong intermarket bearish divergence signal to sell short. The idea here is that it is late in the medium-term cycles of at least the S&P 500 and NASDAQ (and possibly the DOW) and a final cycle top is due from which a significant correction will follow. This could also turn out to be a longer-term cycle top, and if so, a VERY significant and deep correction could follow. This is why our main trading strategy now is to sell short. We are on the sidelines of the broad stock market for now.
Gold and silver prices have been rallying from last week's lows of $1861 for gold and $27.10 for silver. Those lows were above our targets for both metals ($1835 and $26.25, respectively), so we did not buy. There is still time for prices to go lower and closer to those targets and be within a time frame for a significant sub-cycle correction. We will watch for that this week or next. If the rallying continues, we may have to wait a bit longer for another significant correction and possible buying opportunity. Still on the sidelines of gold and silver.
The U.S. Dollar Index seems to be holding above a support line at 90. If the greenback can launch a rally from here, we could see precious metal prices drop some more to approach our target levels.
Crude oil prices pushed slightly above $70 today but then closed slightly below (at $69.96 - July contract chart). There is some resistance at this level ($70). There is a reversal zone specifically for crude coming up next week (June 15 - 23). If resistance at $70 holds, there could be a top forming here. But if crude rallies above $70, we might see a top closer to $75 or even as high as $78 in this upcoming reversal zone before any significant correction. Let's stay on the sidelines for now. We might be enticed to go long on any significant sub-cycle correction as this market still looks quite bullish.