Written by William Kurtz
The major stock Indexes continued to decline Friday, in what probably is a small-degree Wave 3 Down. The Dow has declined to the 38.2% retracement level of its advance from February 6 to March 7, which may serve as a "launching platform" for a small upside corrective move. As mentioned Thursday, we are indeed expecting an upside partial retracement, which should be Wave 4 Up, to be followed by Wave 5 Down to new lows.
I've shown the direction of this prospective "Wave 4 Up" in the accompanying 30-minute chart of the Dow Industrials. The bounce should not surpass the 78.6% retracement level, which is 16327.99 in the Dow Industrials and 1866.92 in the S&P 500. After the bounce shall have become complete, the Dow should decline to new Lows. The accompanying "Dow Daily" chart shows the Dow in larger scale.
The S&P 400 Midcaps, the S&P 600 SmallCaps, and the Russell 2000 may be ahead of the major Indexes by a day or so. Their expected bounces may already have begun, or (at an outside possibility) might already be complete, in their own "Waves 4 Up" or equivalent. The S&P 600 chart shows a Gap that is yet to be filled. The equivalent gap in the Russell 2000 already has been filled.
As the days go by, the evidence continues to grow, in favor of the proposition that a market Top of major historical importance has been posted.
The price rise in Gold is nearly at an end, in a "Wave 4" upside partial correction. Gold could stop and turn down at any time, while noting that it might rise another $50 or $60 before peaking and reversing, depending on the way the rest of this corrective pattern develops. Presumably, the same noted commodity trader who had said a couple of months ago (when Gold was $200 cheaper) that he "would not buy Gold under any circumstances" might now opine that he "would not sell Gold under any circumstances;" and he would be wrong a second time.
When Gold turns down, its price will eventually be driven below its Lows of last summer.
If Gold has been the "locomotive," Silver has been the "caboose," a "Reluctant Dragalong." Put another way, Silver has played "Tonto" to Gold's "Lone Ranger." I think it's probable that Silver will succumb to Gold's upward pull, and will g.ain two or three dollars before turning down, together with Gold, in a selloff to levels below those of last summer.
Coffee appears to have peaked and to have turned down, in what will be a strong selloff during the next month or so, probably in a "Wave 4" partial correction. Thereafter, prices should rise again, to new Highs, in "Wave 5 Up."
There are interesting developments in two or three other commodities, as well.
NOTE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. EVERY INVESTOR MAKES HIS OR HER OWN INVESTMENT DECISIONS AND IS SOLELY RESPONSIBLE FOR THEM.