Crude oil prices are plunging today. When we bought crude on Aug. 17, I suggested a stop loss based on prices breaking below the low of that week. That low came on Aug. 17 at $46.62 (Oct. contract chart). Prices are breaking that low today so we should sell our long position in crude now. Prices are slightly below our entry point so we can get out now with just a small loss. Crude may be falling to another sub-cycle bottom into the end of this week and all of next week which is the next reversal zone specifically for crude. Directional momentum in crude today changed from mixed bullish and bearish to nearly 100% bearish which means the overall trend may be turning bearish. Let's see how low this correction goes as we enter this new reversal zone before we decide on our next trading strategy for crude.
Gold and silver prices both surged up today and broke above their Aug. 17 highs. This is very bullish behavior and could mean that last Friday's low in gold could have a sub-cycle bottom (though it didn't technically go low enough for that). It's also possible that gold and silver prices are edging up for another top this week to be followed by another correction to new lows. The short-term cycle picture is not clear. We will stay on the sidelines for now, but we're still watching for a good entry point to go long as it appears that the trend in these metals is turning bullish.
The broad stock market continues to be indecisive as we now leave a strong reversal zone behind. We now have to label the low of Aug. 21 as the pivot point for that reversal. This suggests that we will rally into the next one (centered around Sept 9), but we could also fall further into that time period if the market doesn't pick up soon. Directional momentum in all three stock market indices (DOW, S&P 500, NASDAQ) is still mixed bullish and bearish so lower equity prices are a real possibility. I am going to hold my short position here for now.