UPDATES ON THE BROAD STOCK MARKET and PRECIOUS METALS (11:30 pm EST)
The broad stock market has been indecisive and stagnant over the last two weeks. It seems like a new medium-term cycle started with the recent lows on Jan. 13 in the DOW and S&P 500, although there's still a chance a new cycle began on Nov. 4 in both indices. In both cases, a sub-cycle crest is due soon (probably this week or next)
which should be followed by a significant sub-cycle correction over 3-8 days.
We should note, however, that we still have a bearish divergence signal in place because the S&P 500 made a new all-time high in January while the DOW and NASDAQ did not. All three indices have come down a bit from their January highs. If they continue to move down, we may have to assume the sub-cycle crests are already in and a correction may be underway that could exceed 8 days. That situation would turn the current trend of this cycle from bullish to bearish.
My preference is for the first - bullish - scenario where the sub-cycle crests are still ahead. To maintain a bullish trend, I would ideally want to see all three indices make new all-time highs either this week or next.. If that happens, we would probably wait for a 3-8 day corrective dip to buy. For now, I am remaining on the sidelines of this market.
Gold prices"broke out" at the end of January when they exceeded their all-time high from October 2024 ($2790). Prices have been rising steadily from there, and the overall trend in this metal is bullish. This is supported by the fact that we can now confirm gold's low of $2541 on Nov. 14, 2024 as the start of a new longer-term 50 week cycle, and it is still early in this cycle. Early stages of cycles are almost always bullish.
Despite this longer term bullish trend, we note that it is late in the current medium-term cycle (which also started on Nov. 14), and so a cycle peak is imminent and will be followed by a significant final correction to the medium-term cycle bottom. This means it's a bit late to be chasing this rally, and I am going to wait for the next corrective low for an opportunity to buy at the start of the next medium-term cycle.
The current vigorous rally in gold may be the result of some nervousness over President Trump's economic agenda and his implementation of tariffs on foreign countries which could make "safe haven" investments like gold more appealing (please note that I am not making a political statement here but simply observing market sentiments and reactions). If this is the case, gold prices could experience a sustained rally through most of this year. Cycle projections show that the current rally could accelerate up to $3000 or even higher, but as I stated above, it's late in the current medium-term cycle, and we are now in a time frame where a peak could happen, so the price could roll over anytime over the next 3-4 weeks. Today gold prices seem to be retreating from yesterday's high at $2940. This might be a turning point. If not, we enter a minor general reversal zone in the last week of February (Feb. 24 - March 3), so that could be another time window for a final peak. Either way, I am staying out of gold for now and anticipating a buying opportunity at the start of the next medium-term cycle.
Silver's current medium-term cycle is not quite as old as gold's, but it too is in a time frame for a significant peak and correction down. I am going to assume the current medium-term cycle started with the the low of $28.78 on Dec. 19 (with a "double-bottom" at $28.80 on Dec.31). The first sub-cycle correction came on Jan. 27 at $29.78. The peak of a second sub-cycle should be happening soon. It's possible it may have already happened with last week's high of $32.59 (that would be bearish). If not, we may see it peak near the end of this month and followed by a significant correction down. In that scenario we would look to buy the bottom of the correction. If prices continue to fall from last week's high, we could see a significant bottom at the end of the month instead of a top. That would also give us an opportunity to buy.
Like gold, silver's overall trend looks quite bullish right now. Our first price target could be a test of $35, and after that, $37 and possibly higher. I am on the sidelines of silver for now and waiting for a corrective low to buy.
The broad stock market has been indecisive and stagnant over the last two weeks. It seems like a new medium-term cycle started with the recent lows on Jan. 13 in the DOW and S&P 500, although there's still a chance a new cycle began on Nov. 4 in both indices. In both cases, a sub-cycle crest is due soon (probably this week or next)
which should be followed by a significant sub-cycle correction over 3-8 days.
We should note, however, that we still have a bearish divergence signal in place because the S&P 500 made a new all-time high in January while the DOW and NASDAQ did not. All three indices have come down a bit from their January highs. If they continue to move down, we may have to assume the sub-cycle crests are already in and a correction may be underway that could exceed 8 days. That situation would turn the current trend of this cycle from bullish to bearish.
My preference is for the first - bullish - scenario where the sub-cycle crests are still ahead. To maintain a bullish trend, I would ideally want to see all three indices make new all-time highs either this week or next.. If that happens, we would probably wait for a 3-8 day corrective dip to buy. For now, I am remaining on the sidelines of this market.
Gold prices"broke out" at the end of January when they exceeded their all-time high from October 2024 ($2790). Prices have been rising steadily from there, and the overall trend in this metal is bullish. This is supported by the fact that we can now confirm gold's low of $2541 on Nov. 14, 2024 as the start of a new longer-term 50 week cycle, and it is still early in this cycle. Early stages of cycles are almost always bullish.
Despite this longer term bullish trend, we note that it is late in the current medium-term cycle (which also started on Nov. 14), and so a cycle peak is imminent and will be followed by a significant final correction to the medium-term cycle bottom. This means it's a bit late to be chasing this rally, and I am going to wait for the next corrective low for an opportunity to buy at the start of the next medium-term cycle.
The current vigorous rally in gold may be the result of some nervousness over President Trump's economic agenda and his implementation of tariffs on foreign countries which could make "safe haven" investments like gold more appealing (please note that I am not making a political statement here but simply observing market sentiments and reactions). If this is the case, gold prices could experience a sustained rally through most of this year. Cycle projections show that the current rally could accelerate up to $3000 or even higher, but as I stated above, it's late in the current medium-term cycle, and we are now in a time frame where a peak could happen, so the price could roll over anytime over the next 3-4 weeks. Today gold prices seem to be retreating from yesterday's high at $2940. This might be a turning point. If not, we enter a minor general reversal zone in the last week of February (Feb. 24 - March 3), so that could be another time window for a final peak. Either way, I am staying out of gold for now and anticipating a buying opportunity at the start of the next medium-term cycle.
Silver's current medium-term cycle is not quite as old as gold's, but it too is in a time frame for a significant peak and correction down. I am going to assume the current medium-term cycle started with the the low of $28.78 on Dec. 19 (with a "double-bottom" at $28.80 on Dec.31). The first sub-cycle correction came on Jan. 27 at $29.78. The peak of a second sub-cycle should be happening soon. It's possible it may have already happened with last week's high of $32.59 (that would be bearish). If not, we may see it peak near the end of this month and followed by a significant correction down. In that scenario we would look to buy the bottom of the correction. If prices continue to fall from last week's high, we could see a significant bottom at the end of the month instead of a top. That would also give us an opportunity to buy.
Like gold, silver's overall trend looks quite bullish right now. Our first price target could be a test of $35, and after that, $37 and possibly higher. I am on the sidelines of silver for now and waiting for a corrective low to buy.
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