UPDATES ON THE BROAD STOCK MARKET and CRUDE OIL (8:00 pm EST)
Although Wall Street and equity markets tend to dislike geopolitical uncertainty, there is a contradictory phenomenon
expressed by the saying, "bull markets climb a wall of worry". This is based on the idea that fearful investors pull out early in a crisis, and only strong investors remain to drive the market up. That seems to be happening as the broad stock market has been soaring over the last three weeks, despite the on/off roller coaster ride of the war with Iran.
Also supporting a bull market now is the fact that we have just started new medium-term cycles in all three of our indices (DOW, S&P 500, and NASDAQ) as well as a new longer-term 1-year cycle, and the early stages of cycles are usually bullish. Although we are still on guard for a final top in a very long-term 18-year cycle (we are in the 17th year), the bullish medium-term and 1-year cycles could drive this market considerably higher (especially if we see a parabolic "blow-off" top) before the peak of that 18-year cycle is reached. (Note that, like all cycles, 18-year cycles can expand several years beyond the 18-year mark.) Once the peak is in, however, we can anticipate a steep corrective fall in the DOW between 35% - 67%. (If a 90-year cycle is operative, that correction could be even greater.)
With the strong possibility of a "blow-off" top in progress, we may be looking to buy the next significant sub-cycle correction in the new medium-term cycles that began with the lows on March 30 at 45,057 (DOW) and 6317 (S&P 500). This week brings us to another strong reversal zone (April 21 - 30). We could see a sub-cycle peak in that time frame, followed by a modest correction (if the market stays bullish). That corrective low could be a good spot to buy, as long as it doesn't go below the start of the cycles.
The S&P 500 and NASDAQ have both broken out to new all-time highs, and the DOW seems poised to do that this week. If it does, it will confirm our bullish view. (If it doesn't, we will have a bearish divergence signal that would jeopardize our bullish view.) For now, we remain on the sidelines of the broad stock market.
Of course, the Iran war has also been affecting crude oil prices. The huge spike to $117 on April 7 (May contract chart) was the result of this conflict. Although geopolitical conflict in the Middle East is always a potential "wild card" factor that can cause volatile surges and dives in oil prices, we can still use cycle analysis and timing to predict significant turning points. (Volatile geopolitics may distort cycles, but it doesn't erase them.)
Some of crude oil's longer-term cycles are a little unclear at the moment, but there is a strong possibility that we just started a new 6-year cycle (in Dec. 2025). If that's the case, crude's trend could be very bullish now. The current medium-term cycle in crude is nearing completion, and the corrective drop from that April 7 spike could be leading to an imminent final bottom to this cycle. Ideally, that bottom would fall inside this week's general reversal zone (April 21 - 30) near $80 (it is already there). Stay tuned, as this may be a good buying spot this week. We would expect a rally from the start of a new medium-term cycle to at least test that $117 high, and most likely exceed it. If we are also starting a new 6-year cycle, prices could eventually go as high as $185! I am currently on the sidelines of crude and watching for a potential buy spot this week or next.
Although Wall Street and equity markets tend to dislike geopolitical uncertainty, there is a contradictory phenomenon
expressed by the saying, "bull markets climb a wall of worry". This is based on the idea that fearful investors pull out early in a crisis, and only strong investors remain to drive the market up. That seems to be happening as the broad stock market has been soaring over the last three weeks, despite the on/off roller coaster ride of the war with Iran.
Also supporting a bull market now is the fact that we have just started new medium-term cycles in all three of our indices (DOW, S&P 500, and NASDAQ) as well as a new longer-term 1-year cycle, and the early stages of cycles are usually bullish. Although we are still on guard for a final top in a very long-term 18-year cycle (we are in the 17th year), the bullish medium-term and 1-year cycles could drive this market considerably higher (especially if we see a parabolic "blow-off" top) before the peak of that 18-year cycle is reached. (Note that, like all cycles, 18-year cycles can expand several years beyond the 18-year mark.) Once the peak is in, however, we can anticipate a steep corrective fall in the DOW between 35% - 67%. (If a 90-year cycle is operative, that correction could be even greater.)
With the strong possibility of a "blow-off" top in progress, we may be looking to buy the next significant sub-cycle correction in the new medium-term cycles that began with the lows on March 30 at 45,057 (DOW) and 6317 (S&P 500). This week brings us to another strong reversal zone (April 21 - 30). We could see a sub-cycle peak in that time frame, followed by a modest correction (if the market stays bullish). That corrective low could be a good spot to buy, as long as it doesn't go below the start of the cycles.
The S&P 500 and NASDAQ have both broken out to new all-time highs, and the DOW seems poised to do that this week. If it does, it will confirm our bullish view. (If it doesn't, we will have a bearish divergence signal that would jeopardize our bullish view.) For now, we remain on the sidelines of the broad stock market.
Of course, the Iran war has also been affecting crude oil prices. The huge spike to $117 on April 7 (May contract chart) was the result of this conflict. Although geopolitical conflict in the Middle East is always a potential "wild card" factor that can cause volatile surges and dives in oil prices, we can still use cycle analysis and timing to predict significant turning points. (Volatile geopolitics may distort cycles, but it doesn't erase them.)
Some of crude oil's longer-term cycles are a little unclear at the moment, but there is a strong possibility that we just started a new 6-year cycle (in Dec. 2025). If that's the case, crude's trend could be very bullish now. The current medium-term cycle in crude is nearing completion, and the corrective drop from that April 7 spike could be leading to an imminent final bottom to this cycle. Ideally, that bottom would fall inside this week's general reversal zone (April 21 - 30) near $80 (it is already there). Stay tuned, as this may be a good buying spot this week. We would expect a rally from the start of a new medium-term cycle to at least test that $117 high, and most likely exceed it. If we are also starting a new 6-year cycle, prices could eventually go as high as $185! I am currently on the sidelines of crude and watching for a potential buy spot this week or next.
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