UPDATE ON THE BROAD STOCK MARKET and CRUDE OIL (11:30 pm EDST)
The attack on Saudi Arabian oil facilities over the week-end is influencing today's financial markets (especially the price of crude oil), as the Trump administration points a finger of blame on Iran for the attack. Although Trump is being a bit guarded with his rhetoric today, he is saying that the U.S. is prepared for conflict with Iran should it be necessary. Of course, any hint of military conflict will make an already jittery broad stock market even more nervous so today's drop in equities shouldn't be a surprise (the DOW lost 142 points). If tensions increase, today's drop could kick-start a major correction, but we 'll have to wait to see if that happens. The alternative is more rallying into our new reversal zone (Sept. 13 - 25). We didn't get a bearish divergence signal last week (one or two, but not all three major indices making new all-time highs). If we get that this week (or next) it will probably be a good spot to sell the market short. Still on the sidelines of the broad stock market.
Of course, crude oil prices spiked dramatically over the week-end and today in response to the attacks on Saudi oil facilities. Crude skyrocketed to $63.34 on Sunday and closed today at $61.89. We are in the dead center of a reversal zone specifically for crude right now so Sunday's high could be a significant top. But this reversal zone continues through the rest of the week. If the Trump administration does any more "saber rattling" this week, prices could edge higher to another top from which we might see a reversal and correction down. It is late in the current medium-term cycle of crude, and we are expecting a final corrective low in two to six weeks. How low the final price goes will depend on how high the current rally can go. With the "wildcard" factor of a U.S./Iran conflict pending, we will stay on the sidelines of crude for now.
The attack on Saudi Arabian oil facilities over the week-end is influencing today's financial markets (especially the price of crude oil), as the Trump administration points a finger of blame on Iran for the attack. Although Trump is being a bit guarded with his rhetoric today, he is saying that the U.S. is prepared for conflict with Iran should it be necessary. Of course, any hint of military conflict will make an already jittery broad stock market even more nervous so today's drop in equities shouldn't be a surprise (the DOW lost 142 points). If tensions increase, today's drop could kick-start a major correction, but we 'll have to wait to see if that happens. The alternative is more rallying into our new reversal zone (Sept. 13 - 25). We didn't get a bearish divergence signal last week (one or two, but not all three major indices making new all-time highs). If we get that this week (or next) it will probably be a good spot to sell the market short. Still on the sidelines of the broad stock market.
Of course, crude oil prices spiked dramatically over the week-end and today in response to the attacks on Saudi oil facilities. Crude skyrocketed to $63.34 on Sunday and closed today at $61.89. We are in the dead center of a reversal zone specifically for crude right now so Sunday's high could be a significant top. But this reversal zone continues through the rest of the week. If the Trump administration does any more "saber rattling" this week, prices could edge higher to another top from which we might see a reversal and correction down. It is late in the current medium-term cycle of crude, and we are expecting a final corrective low in two to six weeks. How low the final price goes will depend on how high the current rally can go. With the "wildcard" factor of a U.S./Iran conflict pending, we will stay on the sidelines of crude for now.
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