UPDATES ON THE BROAD STOCK MARKET and PRECIOUS METALS (11:30 pm EDT)
It seems clear that all three of our broad stock market indices (DOW, S&P 500, NASDAQ) started new medium-term cycles with their lows on April 7. All three then rallied from there and took their first sub-cycle corrections with a modest dip into May 23. From there, another rally has been progressing. In my last blog (May 27), I wrote:
"The next significant reversal zone is coming up in two weeks (June 13 - 23), so we can anticipate a rally into that time frame that should soon exceed those May 19 highs and possibly test the all-time highs of both indices."
Well, we are now approaching that reversal zone (it starts Friday), and the rally has exceeded the May 19 highs in all three indices; however, it is still below the all-time highs. The DOW is near 43,000 which is well below its all-time high of 45,073 from Dec. 4, 2024. The S&P 500 and NASDAQ are much closer to their all-time highs. If these latter two indices (or just one of them) can make a new all-time high without the DOW, we will have a strong bearish divergence signal. That might happen in this upcoming strong reversal zone (June 13 - 23), and if it does, it will be a good time to sell our current long position in the DOW. As I wrote in my last blog:
"...we have to be on guard as the market could turn down again. April 7 could have been the start of a new 3-year cycle in the broad stock market, but until that is confirmed, there is the danger of another steep correction before the year is over."
For now, I am holding that long DOW position, which I entered on May 7.
I entered a short position in gold on April 22 - the day it nearly touched $3500 ( it made an all-time high at $3496). In my May 27 blog I wrote:
" I am still looking for a deeper longer-term cycle correction to the $3000 level, or even a bit lower before we see gold rally to another new all-time high... but if prices rally back up and close above $3400, I may cover this short position."
This still applies. Gold prices fell sharply from that April 22 all-time high to $3127 on May 15, but then they rallied back up. They tested $3400 last week and may do so again this week or next. We enter a strong reversal zone for the precious metals next week (June 16 - 25). If resistance at $3400 holds, we might see prices plunge to a new low inside that time frame. But gold could also push up to a new high in that same window and THEN reverse back down. For now, I am holding my short gold position with a stop loss on a close above $3400.
Unlike gold, silver blasted off last week, and on Monday prices made a new 12 year high. While this is bullish, we note that if another high is made in the upcoming reversal zone, we could get a significant correction back down. We also note that silver's new high was made without a new high in gold, and this gives us a strong bearish divergence signal. I am staying out of silver for now. A corrective dip into next week's reversal zone might give us a buying opportunity.
It seems clear that all three of our broad stock market indices (DOW, S&P 500, NASDAQ) started new medium-term cycles with their lows on April 7. All three then rallied from there and took their first sub-cycle corrections with a modest dip into May 23. From there, another rally has been progressing. In my last blog (May 27), I wrote:
"The next significant reversal zone is coming up in two weeks (June 13 - 23), so we can anticipate a rally into that time frame that should soon exceed those May 19 highs and possibly test the all-time highs of both indices."
Well, we are now approaching that reversal zone (it starts Friday), and the rally has exceeded the May 19 highs in all three indices; however, it is still below the all-time highs. The DOW is near 43,000 which is well below its all-time high of 45,073 from Dec. 4, 2024. The S&P 500 and NASDAQ are much closer to their all-time highs. If these latter two indices (or just one of them) can make a new all-time high without the DOW, we will have a strong bearish divergence signal. That might happen in this upcoming strong reversal zone (June 13 - 23), and if it does, it will be a good time to sell our current long position in the DOW. As I wrote in my last blog:
"...we have to be on guard as the market could turn down again. April 7 could have been the start of a new 3-year cycle in the broad stock market, but until that is confirmed, there is the danger of another steep correction before the year is over."
For now, I am holding that long DOW position, which I entered on May 7.
I entered a short position in gold on April 22 - the day it nearly touched $3500 ( it made an all-time high at $3496). In my May 27 blog I wrote:
" I am still looking for a deeper longer-term cycle correction to the $3000 level, or even a bit lower before we see gold rally to another new all-time high... but if prices rally back up and close above $3400, I may cover this short position."
This still applies. Gold prices fell sharply from that April 22 all-time high to $3127 on May 15, but then they rallied back up. They tested $3400 last week and may do so again this week or next. We enter a strong reversal zone for the precious metals next week (June 16 - 25). If resistance at $3400 holds, we might see prices plunge to a new low inside that time frame. But gold could also push up to a new high in that same window and THEN reverse back down. For now, I am holding my short gold position with a stop loss on a close above $3400.
Unlike gold, silver blasted off last week, and on Monday prices made a new 12 year high. While this is bullish, we note that if another high is made in the upcoming reversal zone, we could get a significant correction back down. We also note that silver's new high was made without a new high in gold, and this gives us a strong bearish divergence signal. I am staying out of silver for now. A corrective dip into next week's reversal zone might give us a buying opportunity.
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