Equity markets are rallying strongly today with all three market indices (DOW, S&P 500, NASDAQ) exceeding last week's highs. This negates our bearish divergence signal from early this week and suggests that markets could rally into our next strong reversal zone (Sept. 13 - 25) which starts on Friday. If that happens, we will look for another bearish divergence signal (one or two, but not all three indices making new all-time highs) either next week or in the first half of the following week. That is our ideal scenario to sell short. But, of course, we don't always get what we want, especially in volatile markets. We could see a final top to the current medium-term cycle anytime from now through Sept. 25 followed by a sharp fall to the final cycle bottom. If all three indices make new all-time highs, we may even see this rally continue into early October before turning down. OK, those are all the possibilities, but for now let's look for a bearish divergence signal next week (or the following week) for an opportunity to sell this market short. Still on the sidelines of the broad stock market.
Gold and silver prices seem to be stabilizing yesterday and today in the center of this week's reversal zone so there's a possibility of them turning up here. Gold's directional momentum, however, switched from 100% bullish to mixed bullish and bearish on Monday so I think prices are still declining into the final cycle bottom for both metals due most likely next week (or possibly the following week) in a reversal zone specifically for the precious metals (Sept. 13 - 27). Although we could see a bottom now, we are not quite into our target prices of $1400 - $1450 for gold and $17 - $17.50 in silver so this is another argument for a cycle bottom next week (or the following week). Let's stay on the sidelines of both metals for now.
From a high of $58.39 on Monday (Oct. contract chart), crude oil prices plunged to $55.61 today. Unless prices can rise back up and exceed $58.39 by the end of next week, it looks like this market could be turning bearish. That would be confirmed if prices drop and close below $52. Let's wait and see how prices move over the next seven trading days. If this market is turning bearish, that may not bode well for the broad stock market. On the sidelines of crude oil.