BROAD STOCK MARKET AND CRUDE OIL UPDATE (1:45 am EST)
In my last blog post on Friday I did not have time to describe the condition of the broad stock market and crude oil in much detail, and so I will elaborate on this a bit more here as both of these markets are a little tricky to call right now, at least short-term.
It appears the broad stock market may be at the start of a new trading cycle, and if so, it could continue its bullish rise for at least a few more weeks before topping out with new all-time highs in all three markets (DOW, S&P 500, NASDAQ). There are technical signals that support this scenario at the moment, but there are are also technical signals now suggesting the market is topping out and could be ready to turn down and make a significant correction soon (this would indicate an old cycle ending instead of a new one starting). It is noteworthy that even though the DOW recently broke its all-time high, the S&P 500 (which is generally considered to be a broader and more acurate reflection of the stock market) has not yet done so (it is close), and breaking through this level could be a significant bullish development. The general public and mainstream media are quite bullish on the broad stock market right now, but this kind of public optimism frequently heralds major downturns, and like public sentiment towards the precious metals (low right now in spite of overwhelmingly bullish technical signals), mainstream Wall Street "talking heads" cannot be relied on to accurately gauge the broad stock market (and may even be considered contra-indicators). Because the short-term picture of the broad stock market is not clear, we are staying on the sidelines for now. I will say that the mid-term and long-term stock market picture continues to look bad, and we are therefore on constant alert for any signs of a major correction or "crash" unfolding (which we would sell short).
Crude oil, like the broad stock market, may also be in the early stage of a new trading cycle (which is why we established long positions in crude almost two weeks ago). Our long positions have been doing well, and the price of crude should continue to rise if this trading cycle is new. If it turns out that we are still at the end of an older trading cycle (instead of the start of a new one), then we may get another low before we rally. Should that scenario unfold, we could bail out and then establish new long positions with little or no loss. (Another option would be to just ride out the dip). Note that crude oil and the broad stock market generally tend to move in sync with each other, so we will watch both markets carefully now for directional indicators. We are holding our long positions here.
In my last blog post on Friday I did not have time to describe the condition of the broad stock market and crude oil in much detail, and so I will elaborate on this a bit more here as both of these markets are a little tricky to call right now, at least short-term.
It appears the broad stock market may be at the start of a new trading cycle, and if so, it could continue its bullish rise for at least a few more weeks before topping out with new all-time highs in all three markets (DOW, S&P 500, NASDAQ). There are technical signals that support this scenario at the moment, but there are are also technical signals now suggesting the market is topping out and could be ready to turn down and make a significant correction soon (this would indicate an old cycle ending instead of a new one starting). It is noteworthy that even though the DOW recently broke its all-time high, the S&P 500 (which is generally considered to be a broader and more acurate reflection of the stock market) has not yet done so (it is close), and breaking through this level could be a significant bullish development. The general public and mainstream media are quite bullish on the broad stock market right now, but this kind of public optimism frequently heralds major downturns, and like public sentiment towards the precious metals (low right now in spite of overwhelmingly bullish technical signals), mainstream Wall Street "talking heads" cannot be relied on to accurately gauge the broad stock market (and may even be considered contra-indicators). Because the short-term picture of the broad stock market is not clear, we are staying on the sidelines for now. I will say that the mid-term and long-term stock market picture continues to look bad, and we are therefore on constant alert for any signs of a major correction or "crash" unfolding (which we would sell short).
Crude oil, like the broad stock market, may also be in the early stage of a new trading cycle (which is why we established long positions in crude almost two weeks ago). Our long positions have been doing well, and the price of crude should continue to rise if this trading cycle is new. If it turns out that we are still at the end of an older trading cycle (instead of the start of a new one), then we may get another low before we rally. Should that scenario unfold, we could bail out and then establish new long positions with little or no loss. (Another option would be to just ride out the dip). Note that crude oil and the broad stock market generally tend to move in sync with each other, so we will watch both markets carefully now for directional indicators. We are holding our long positions here.
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