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.
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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.
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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.
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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.
