In Tuesday's blog on crude oil I wrote:
"It looks like crude oil was not ready to fall from its July 20th high of $47.74 and has rallied higher today to $47.97 (Sept. contract chart). We are still in a reversal zone for crude (it ends Friday) so prices could still turn down this week. Because prices are making new highs, there is a good chance that the June 21 low of $42.27 was the start of a new medium-term cycle and maybe even a longer-term cycle which would mean that crude's trend is turning bullish. Nevertheless, this new high is in a reversal zone so some sort of correction now is likely from a high forming this week."
Crude prices are touching $49.72 (Sept. contract chart) at the time of this writing. It's now even more likely that June 21 was the start of a new cycle that is bullish. Today is technically the last day of the reversal zone for crude, but this time window is blending in with a general reversal zone for all markets that extends into next week so it is possible for crude prices to still push higher. Could prices turn down from here? Yes, but the start of a new cycle is often strongly bullish, and that could give more momentum to this rally into next week. Our short position was entered early on July 21 around $47. Many traders may already be stopped out of this trade from my suggested original stop loss of $48. Today's prices seem to be closing above my second suggested stop loss of $49 so we should now be completely out of crude oil. Any sub-cycle correction now will be viewed as a buying opportunity as soon as we can confirm June 21 as the start of a new long-term cycle.
The broad stock market seems to be leveling off and losing some of its upward momentum as it continues through a long reversal zone that extends through next week. We are still watching for signs of a top to sell short. On the sidelines here.
Gold and silver are rallying strongly today which is a nice thumbs up to our long position in gold that we entered yesterday. We need to see this rally carry through into next week, however, to avert the danger of another turn down in this week's reversal zone. We are long in gold and on the sidelines of silver.