BROAD STOCK MARKET TRADE ALERT and CRUDE OIL UPDATE (7:30 pm EST)
The broad stock market's medium-term cycle labeling is unclear at the moment. It's still possible that the DOW and S&P 500 started new cycles with their lows on Nov. 4, but it seems more likely that the old medium-term cycles are still in place and due to bottom soon. If that's the case, then they could either sell-off now and continue to their final bottoms over the 1 - 4 weeks or they could rally to new highs and then sell-off for the final corrective drop. A rally now seems more likely (especially if these are new cycles) because both indices are falling steeply into the current reversal zone that ends on Wednesday. Also, Wall Street seems to be in a state of "Trumphoria" (as it was after Trump's election in 2016), so the odds of a sell-off in this reversal zone seem low. The target for a rally now could be as high as 46,800.
The next general reversal zone (a strong one) is coming up Dec. 3 - 12. That could end up being the final top (likely)or final bottom to these medium-term cycles depending on which of the above scenarios plays out. The current reversal zone ends Wednesday, and all three broad stock market indices are now near strong support lines. This looks like a good place to buy. I am going to place a buy order for tomorrow's market open now. I am going to buy the DOW (index fund) as it seems to have the greatest potential profit if the market rallies now. I am placing an initial stop loss for this trade on a weekly close below 42,600.
It is still not clear if crude oil's short-term direction is bullish or bearish, but it is starting to look more like the latter. Crude started a new medium-term cycle with its low of $64.16 (Dec. contract chart) on Sept. 10. It then rose to a peak of $77.70 on Oct. 8 and fell to its first sub-cycle bottom on Oct. 29 at $66.72. Prices rose from there and are now falling to a second sub-cycle low that today slightly breached the first one ($66.61). Unless prices start rallying strongly from here, they could be headed lower to turn the cycle trend bearish. That could happen because it is possible we are nearing the end of a longer-term (2-year) cycle in crude that could bottom as early as December. If that's the case, the end of the current medium-term cycle and that 2-year cycle would converge with a simultaneous bottom. If that happens, it will be a good spot to buy. For now, we will stay on the sidelines of crude oil.
The broad stock market's medium-term cycle labeling is unclear at the moment. It's still possible that the DOW and S&P 500 started new cycles with their lows on Nov. 4, but it seems more likely that the old medium-term cycles are still in place and due to bottom soon. If that's the case, then they could either sell-off now and continue to their final bottoms over the 1 - 4 weeks or they could rally to new highs and then sell-off for the final corrective drop. A rally now seems more likely (especially if these are new cycles) because both indices are falling steeply into the current reversal zone that ends on Wednesday. Also, Wall Street seems to be in a state of "Trumphoria" (as it was after Trump's election in 2016), so the odds of a sell-off in this reversal zone seem low. The target for a rally now could be as high as 46,800.
The next general reversal zone (a strong one) is coming up Dec. 3 - 12. That could end up being the final top (likely)or final bottom to these medium-term cycles depending on which of the above scenarios plays out. The current reversal zone ends Wednesday, and all three broad stock market indices are now near strong support lines. This looks like a good place to buy. I am going to place a buy order for tomorrow's market open now. I am going to buy the DOW (index fund) as it seems to have the greatest potential profit if the market rallies now. I am placing an initial stop loss for this trade on a weekly close below 42,600.
It is still not clear if crude oil's short-term direction is bullish or bearish, but it is starting to look more like the latter. Crude started a new medium-term cycle with its low of $64.16 (Dec. contract chart) on Sept. 10. It then rose to a peak of $77.70 on Oct. 8 and fell to its first sub-cycle bottom on Oct. 29 at $66.72. Prices rose from there and are now falling to a second sub-cycle low that today slightly breached the first one ($66.61). Unless prices start rallying strongly from here, they could be headed lower to turn the cycle trend bearish. That could happen because it is possible we are nearing the end of a longer-term (2-year) cycle in crude that could bottom as early as December. If that's the case, the end of the current medium-term cycle and that 2-year cycle would converge with a simultaneous bottom. If that happens, it will be a good spot to buy. For now, we will stay on the sidelines of crude oil.
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