UPDATES ON THE BROAD STOCK MARKET and PRECIOUS METALS (11:30 pm EST)
In Sunday's update on the broad stock market, I wrote:
"We are now in the center of that strong reversal zone (Jan. 13 - 23), so a significant top could be forming. If the NASDAQ stays below 24,020 next week, our intermarket bearish divergence signal will stay intact, and a top would likely form before Friday."
The tops may have formed a little early on Jan. 12 (DOW and S&P 500) and Jan.13 (NASDAQ) as all three indices took a deep dive yesterday (Jan. 20) - likely indicating a correction has begun (unless one, two, or all three can pop back up over the next two days to make new highs). There was some rallying today, but the NASDAQ is staying below its 45-day and 15-day moving averages. (The S&P 500 is between those two averages, but the DOW is back above both.)
The testing of one or both of those averages is the minimal requirement for a sub-cycle correction. If this market is going to stay bullish, that could have been it, and we could now see more rallying to new highs. But the bearish divergence signal between the NASDAQ and its two companions remains intact (the NASDAQ still hasn't exceeded its all-time high from October, while the DOW and S&P 500 made new all-time highs last week). That suggests the market could be headed lower for a deeper sub-cycle correction. I am favoring this latter bearish view for now, and
I am remaining on the sidelines of this market.
Both gold and silver are making new all-time highs this week. That's bullish, but it's happening inside a general reversal zone AND a reversal zone specifically for the precious metals that ends this Friday (Jan. 13 - 23). Some sort of top could be imminent with a significant correction to follow.
I am remaining on the sidelines of both metals for now.
In Sunday's update on the broad stock market, I wrote:
"We are now in the center of that strong reversal zone (Jan. 13 - 23), so a significant top could be forming. If the NASDAQ stays below 24,020 next week, our intermarket bearish divergence signal will stay intact, and a top would likely form before Friday."
The tops may have formed a little early on Jan. 12 (DOW and S&P 500) and Jan.13 (NASDAQ) as all three indices took a deep dive yesterday (Jan. 20) - likely indicating a correction has begun (unless one, two, or all three can pop back up over the next two days to make new highs). There was some rallying today, but the NASDAQ is staying below its 45-day and 15-day moving averages. (The S&P 500 is between those two averages, but the DOW is back above both.)
The testing of one or both of those averages is the minimal requirement for a sub-cycle correction. If this market is going to stay bullish, that could have been it, and we could now see more rallying to new highs. But the bearish divergence signal between the NASDAQ and its two companions remains intact (the NASDAQ still hasn't exceeded its all-time high from October, while the DOW and S&P 500 made new all-time highs last week). That suggests the market could be headed lower for a deeper sub-cycle correction. I am favoring this latter bearish view for now, and
I am remaining on the sidelines of this market.
Both gold and silver are making new all-time highs this week. That's bullish, but it's happening inside a general reversal zone AND a reversal zone specifically for the precious metals that ends this Friday (Jan. 13 - 23). Some sort of top could be imminent with a significant correction to follow.
I am remaining on the sidelines of both metals for now.
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