MARKETS UPDATE (4:30 pm EDST)
Today is the last day of our current reversal zone (May 15 - 22) and none of the broad stock market indices (DOW, S&P 500, NASDAQ) are making new lows below their deep lows from last week. That means this reversal likely correlates with the highs from May 16 and the steep corrective dip that followed. So where does the market go from here? Well, as long as those lows from last week aren't breached, they could represent the start of a new medium-term cycle (which would be very bullish). But this market also seems reluctant to rally strongly so these indices might still push lower to form their final (older) cycle bottoms in June (bearish). If these indices can close this week above last week's highs, it would support the bullish scenario (new cycles). There is currently a resistance area for the DOW at 26,000 - 26,131 and for the S&P 500 at 2,900 - 2,910. If Friday closes above those areas, that would also strongly suggest new medium-term cycles started with those May 13 lows. If that turns out to be the case, we will watch for any minor corrective dip to buy for a strong rally into the summer. Otherwise, we will wait for a final corrective bottom to buy sometime in June. Still on the sidelines of the broad stock market.
We are today at the end of a reversal zone for precious metals too (May 15 - 22) and both metals appear to be bottoming with gold still holding above its low of $1265 from April 23. Yes, this looks like it could be a good set-up to buy, but there are several bearish short-term signals right now that make me reluctant to do so (COT- commitment of traders- charts do not look that good, gold miner index ETFs- GDX, GDXJ- are 100% bearish, the gold/silver mining company index XAU is 100% bearish). We are also about to enter the month of June which is traditionally a bad time for gold prices. Let's stay on the sidelines of gold and silver for now. If these metals don't bottom now, we will look to buy a deeper bottom probably in mid to late June.
In Sunday's blog on crude oil I wrote:
"Crude oil's low at $60.04 on May 5 (June contract chart) may well have been the start of a new medium-term cycle, but its weak rally from there is calling this into question (new cycles usually start off very bullish). Prices are now rising into the current reversal zone (May 15 -22) so we could see them back down from a high between now and this Wednesday. If they do go lower and hold above that $60.04 low, we will look to buy. But if that low breaks, we may have to wait until June for the final cycle bottom."
The high was on Sunday and prices have been falling sharply this week. Today they plunged down to $61.03 (July contract chart). There is a support line this week at $61. Let's see if that support is breached tomorrow. If it holds, we may have a good spot to go long as we could be seeing a bullish "double-bottom" to the May 5 low of $60. If the $60 level breaks and this week closes below there it means that May 5 did not start a new cycle and we might have to wait for the final cycle bottom (of an older cycle) probably in the second week of June. On the sidelines but waiting to buy the cycle bottom soon (maybe this week).
Today is the last day of our current reversal zone (May 15 - 22) and none of the broad stock market indices (DOW, S&P 500, NASDAQ) are making new lows below their deep lows from last week. That means this reversal likely correlates with the highs from May 16 and the steep corrective dip that followed. So where does the market go from here? Well, as long as those lows from last week aren't breached, they could represent the start of a new medium-term cycle (which would be very bullish). But this market also seems reluctant to rally strongly so these indices might still push lower to form their final (older) cycle bottoms in June (bearish). If these indices can close this week above last week's highs, it would support the bullish scenario (new cycles). There is currently a resistance area for the DOW at 26,000 - 26,131 and for the S&P 500 at 2,900 - 2,910. If Friday closes above those areas, that would also strongly suggest new medium-term cycles started with those May 13 lows. If that turns out to be the case, we will watch for any minor corrective dip to buy for a strong rally into the summer. Otherwise, we will wait for a final corrective bottom to buy sometime in June. Still on the sidelines of the broad stock market.
We are today at the end of a reversal zone for precious metals too (May 15 - 22) and both metals appear to be bottoming with gold still holding above its low of $1265 from April 23. Yes, this looks like it could be a good set-up to buy, but there are several bearish short-term signals right now that make me reluctant to do so (COT- commitment of traders- charts do not look that good, gold miner index ETFs- GDX, GDXJ- are 100% bearish, the gold/silver mining company index XAU is 100% bearish). We are also about to enter the month of June which is traditionally a bad time for gold prices. Let's stay on the sidelines of gold and silver for now. If these metals don't bottom now, we will look to buy a deeper bottom probably in mid to late June.
In Sunday's blog on crude oil I wrote:
"Crude oil's low at $60.04 on May 5 (June contract chart) may well have been the start of a new medium-term cycle, but its weak rally from there is calling this into question (new cycles usually start off very bullish). Prices are now rising into the current reversal zone (May 15 -22) so we could see them back down from a high between now and this Wednesday. If they do go lower and hold above that $60.04 low, we will look to buy. But if that low breaks, we may have to wait until June for the final cycle bottom."
The high was on Sunday and prices have been falling sharply this week. Today they plunged down to $61.03 (July contract chart). There is a support line this week at $61. Let's see if that support is breached tomorrow. If it holds, we may have a good spot to go long as we could be seeing a bullish "double-bottom" to the May 5 low of $60. If the $60 level breaks and this week closes below there it means that May 5 did not start a new cycle and we might have to wait for the final cycle bottom (of an older cycle) probably in the second week of June. On the sidelines but waiting to buy the cycle bottom soon (maybe this week).
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