UPDATES ON CRUDE OIL and the BROAD STOCK MARKET (11:30 pm EST)
Today crude oil broke and closed below a support line at $74. There is another line of support around $72. Tomorrow is the eighth day of declining prices from the Jan. 15 high of $79.39. A normal sub-cycle correction usually lasts 3-8 days. We are also at the exact center of a strong general reversal zone, and tomorrow we enter a reversal zone specifically for crude. A corrective bottom could be forming shortly, ideally between the 15-day and 45-day moving averages, which is where we are right now. There's a possibility of a deeper correction, but I'm not going to worry about that unless prices start closing below the 45-day moving average (now at $71.36 and rising). That average is still my stop loss for my long position in crude, which I am holding for now.
Last Wednesday I wrote about the broad stock market:
"Right now it makes no difference whether these are old medium-term cycles or newer ones. Even if they are new ones starting with last week's lows on Jan. 13, there is a strong possibility of an imminent high between now and next Friday and then a sharp reversal back down. If that reversal becomes serious, we might see the deep correction we were expecting sometime this year come sooner rather than later."
Today all three of our broad stock market indices (DOW, S&P 500, NASDAQ) took downward corrections, but the S&P 500 and NASDAQ plunges were especially dramatic (the NASDAQ dropped over 3%). It looks like a significant correction is underway from today's new high in the DOW and last Friday's highs in the S&P 500 and NASDAQ, which is not surprising as we are at the center of a strong reversal zone. We'll have to wait and see how low this correction will go before we can start to label the current medium-term cycles. If the DOW starts closing below 41,647 and the S&P 500 below 5696, we could be seeing the start of a serious sell-off. We are remaining on the sidelines of this market for now.
Today crude oil broke and closed below a support line at $74. There is another line of support around $72. Tomorrow is the eighth day of declining prices from the Jan. 15 high of $79.39. A normal sub-cycle correction usually lasts 3-8 days. We are also at the exact center of a strong general reversal zone, and tomorrow we enter a reversal zone specifically for crude. A corrective bottom could be forming shortly, ideally between the 15-day and 45-day moving averages, which is where we are right now. There's a possibility of a deeper correction, but I'm not going to worry about that unless prices start closing below the 45-day moving average (now at $71.36 and rising). That average is still my stop loss for my long position in crude, which I am holding for now.
Last Wednesday I wrote about the broad stock market:
"Right now it makes no difference whether these are old medium-term cycles or newer ones. Even if they are new ones starting with last week's lows on Jan. 13, there is a strong possibility of an imminent high between now and next Friday and then a sharp reversal back down. If that reversal becomes serious, we might see the deep correction we were expecting sometime this year come sooner rather than later."
Today all three of our broad stock market indices (DOW, S&P 500, NASDAQ) took downward corrections, but the S&P 500 and NASDAQ plunges were especially dramatic (the NASDAQ dropped over 3%). It looks like a significant correction is underway from today's new high in the DOW and last Friday's highs in the S&P 500 and NASDAQ, which is not surprising as we are at the center of a strong reversal zone. We'll have to wait and see how low this correction will go before we can start to label the current medium-term cycles. If the DOW starts closing below 41,647 and the S&P 500 below 5696, we could be seeing the start of a serious sell-off. We are remaining on the sidelines of this market for now.
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