CRUDE OIL TRADE ALERT and MARKETS UPDATE (3:30 pm EST)
My blog post early last Friday morning on crude oil stated:
" We have a tight stop loss at $55.60 for our short position in crude that we entered early Wednesday. "
Friday's prices closed at $55.70 (Dec. contract chart) so traders should have been stopped out of their short positions. Today prices are edging even higher, but we could still be making a top here, and if so we were "whipsawed" out of our short trade. If prices continue higher after Tuesday, however, we will have to look for a top in the next reversal zone for crude which is coming up Nov. 14 - 22. It would be better and would fit a more "normal" cycle pattern for crude to turn down now and make its final medium-term cycle bottom within that next reversal date, but this market seems to be taking its cues from the broad stock market which is also distorting its normal cycle and pushing outside its normal time range for a top. We will stay on the sidelines for now. If crude does turn down and falls into next week's reversal zone, we will look to buy what should be the final bottom of the current medium-term cycle.
The broad stock market indices (DOW, S&P 500 and NASDAQ) are all making new highs today so again we will have no intermarket bearish divergence signal for the week. We are also now moving out of a reversal zone for equities so there is a good chance this market will move higher into the next reversal zone (Nov. 13 - 21). As I mentioned above, the current medium-term cycle in the broad stock market is not behaving normally and is distorting. Equity markets are extremely overbought and yet are resisting normal corrections in an ongoing display of "irrational exuberance". As with crude, it would be better for equities to correct down into the next reversal zone as it would give us a good spot to buy; but if this market continues to push higher, we will look to sell short a top in that same time period. Still on the sidelines of the broad stock market. I realize it is frustrating to be on the sidelines of trading for such long periods of time, but the unusual behavior of all markets right now is requiring us to be especially cautious.
It is still not clear if gold and/or silver are starting new bullish cycles from their Oct. 6 lows or if prices are ready to fall lower to complete older cycle bottoms over the next several weeks. Today is the last day of the current reversal zone for precious metals, and silver is making a new weekly high while gold is not so we are getting a bearish divergence signal here. On the other hand, both metals are up strongly today and silver's directional momentum is 100% bullish (gold's is mixed bullish and bearish). Gold is close to making a new weekly high, and if it does that tomorrow or even later in the week it will support the idea of a younger, bullish cycle. Otherwise, we watch for a correction with gold possibly falling to the $1,200 area and/or silver below $16. On the sidelines of gold and silver for now.
The U.S. Dollar Index has been rallying, but it needs to break above resistance at 95 soon in order to continue to look bullish short-term. More precisely, it needs to close above its Oct. 27 high of 95.15 which was made in a reversal zone specifically for currencies. As long as that high holds, the greenback is in danger of losing its recent upward momentum and could start falling again. I would prefer to see the dollar push higher now as it would put downward pressure on gold and silver and possibly push their prices to the bottom of an older cycle and a good spot to buy.
My blog post early last Friday morning on crude oil stated:
" We have a tight stop loss at $55.60 for our short position in crude that we entered early Wednesday. "
Friday's prices closed at $55.70 (Dec. contract chart) so traders should have been stopped out of their short positions. Today prices are edging even higher, but we could still be making a top here, and if so we were "whipsawed" out of our short trade. If prices continue higher after Tuesday, however, we will have to look for a top in the next reversal zone for crude which is coming up Nov. 14 - 22. It would be better and would fit a more "normal" cycle pattern for crude to turn down now and make its final medium-term cycle bottom within that next reversal date, but this market seems to be taking its cues from the broad stock market which is also distorting its normal cycle and pushing outside its normal time range for a top. We will stay on the sidelines for now. If crude does turn down and falls into next week's reversal zone, we will look to buy what should be the final bottom of the current medium-term cycle.
The broad stock market indices (DOW, S&P 500 and NASDAQ) are all making new highs today so again we will have no intermarket bearish divergence signal for the week. We are also now moving out of a reversal zone for equities so there is a good chance this market will move higher into the next reversal zone (Nov. 13 - 21). As I mentioned above, the current medium-term cycle in the broad stock market is not behaving normally and is distorting. Equity markets are extremely overbought and yet are resisting normal corrections in an ongoing display of "irrational exuberance". As with crude, it would be better for equities to correct down into the next reversal zone as it would give us a good spot to buy; but if this market continues to push higher, we will look to sell short a top in that same time period. Still on the sidelines of the broad stock market. I realize it is frustrating to be on the sidelines of trading for such long periods of time, but the unusual behavior of all markets right now is requiring us to be especially cautious.
It is still not clear if gold and/or silver are starting new bullish cycles from their Oct. 6 lows or if prices are ready to fall lower to complete older cycle bottoms over the next several weeks. Today is the last day of the current reversal zone for precious metals, and silver is making a new weekly high while gold is not so we are getting a bearish divergence signal here. On the other hand, both metals are up strongly today and silver's directional momentum is 100% bullish (gold's is mixed bullish and bearish). Gold is close to making a new weekly high, and if it does that tomorrow or even later in the week it will support the idea of a younger, bullish cycle. Otherwise, we watch for a correction with gold possibly falling to the $1,200 area and/or silver below $16. On the sidelines of gold and silver for now.
The U.S. Dollar Index has been rallying, but it needs to break above resistance at 95 soon in order to continue to look bullish short-term. More precisely, it needs to close above its Oct. 27 high of 95.15 which was made in a reversal zone specifically for currencies. As long as that high holds, the greenback is in danger of losing its recent upward momentum and could start falling again. I would prefer to see the dollar push higher now as it would put downward pressure on gold and silver and possibly push their prices to the bottom of an older cycle and a good spot to buy.
RSS Feed