The broad stock market continued its tumble down today. The DOW broke below support at 35,200 and may now find support at the 35,000 level. The S&P 500 moved down to a line of support around 4,530. The NASDAQ broke below last week's low and is now approaching the 14,181 support I mentioned in my last blog. If these supports hold into the end of the week, the correction may be over (for now), but if traders/investors start panicking, this fall could gain more momentum, and the plunge could continue into next week. We will continue to hold our short position in the NASDAQ until we see signs of a corrective bottom forming.
Gold and silver prices both exploded up today to new weekly (and monthly) highs, This negates our bearish divergence signal from yesterday and most likely confirms that the trend for both cycles is now bullish. We are still within our reversal zone for both metals (it ends Friday), so it is possible these new highs could form a top followed by a significant correction. If that happens, we will look for buying opportunities as the bullish trend could take prices considerably higher over the next several weeks. Longer-term, we are still waiting to see if gold can break above $1900 and possibly challenge its all-time high of $2070 from Aug. 2020. If that doesn't happen soon, we will have to assume the top to gold's 23-year cycle is in (at $2070) and that, longer-term, prices are now falling to a final 23-year cycle bottom due around 2024-2024. (NOTE - Even if that is happening, there are still buying opportunities for shorter-term traders as markets never move down in a straight line - there are always sub-cycle rallies and corrections along the way. Once the 23-year cycle top is confirmed, however, our trading preference will be to sell-short at the top of sub-cycle rallies.) We are still on the sidelines of gold and silver.
Crude oil prices continued rising today in an amazingly steep rally that nearly touched $87 (March contract chart). Tomorrow is the last day of our reversal zone for crude (we may extend it into Friday), so this market is ripe for a top and a correction now. As with gold and silver, we will watch for any correction as a possible buying opportunity. Crude may have started a new longer-term cycle in December, and that would mean the market could be very bullish for many more months. On the sidelines of crude for now.