UPDATES on THE BROAD STOCK MARKET and CRUDE OIL (10:00 pm EST)
On Thursday and Friday last week, all three of our broad stock market indices (DOW, S&P 500, NASDAQ) rallied strongly and broke to new weekly highs. Significantly, the S&P 500 finally broke above its all-time high (4,819 from Jan. 2022). This leaves only the NASDAQ below its all-time high (16,212 from Nov. 2021), but it is fast approaching that high after last week's steep rally. Until the NASDAQ breaches that high, however, we have a strong intermarket bearish divergence signal to put a curb on any rally.
After their mid-cycle "dips", all three indices are now headed towards their final medium-term cycle highs to be followed by a steep correction down to their final cycle bottoms due sometime over the next two months. There's a good chance those final tops could happen in our next strong reversal zone coming up next week (Jan. 23 - Feb. 1) or even in a weaker one in the first week of February (Feb. 2 - 13). We may consider short-selling if a top looks imminent, but because the trend in this market is very bullish now, we might just wait for the final bottom and buy the start of a new medium-term cycle and ride a bullish rally into the middle of the year. For now, we will not chase this rally, and we will remain on the sidelines of the broad stock market.
Crude oil broke and closed above its 15-day and 45-day moving averages on Friday. While this is bullish behavior, we note that prices are still below the strong resistance at $75 (Feb. contract chart), and we are about to enter a very strong general reversal zone that precisely over laps another reversal zone specifically for crude coming up next week (Jan.23 - Feb. 1). Unless these reversals correspond to a "break-out" in crude (possible, but not likely), we could see prices turn back down from an isolated high anytime in the next two weeks. If prices can rally significantly above $76.18 before turning down, it could confirm the low of Dec. 13 ($67.98) as the start of a new bullish medium-term cycle. Otherwise, we expect prices to go lower before we see a significant medium-term cycle bottom, and possibly a 4-year cycle bottom at or below $65.24. We remain on the sidelines of crude oil.
On Thursday and Friday last week, all three of our broad stock market indices (DOW, S&P 500, NASDAQ) rallied strongly and broke to new weekly highs. Significantly, the S&P 500 finally broke above its all-time high (4,819 from Jan. 2022). This leaves only the NASDAQ below its all-time high (16,212 from Nov. 2021), but it is fast approaching that high after last week's steep rally. Until the NASDAQ breaches that high, however, we have a strong intermarket bearish divergence signal to put a curb on any rally.
After their mid-cycle "dips", all three indices are now headed towards their final medium-term cycle highs to be followed by a steep correction down to their final cycle bottoms due sometime over the next two months. There's a good chance those final tops could happen in our next strong reversal zone coming up next week (Jan. 23 - Feb. 1) or even in a weaker one in the first week of February (Feb. 2 - 13). We may consider short-selling if a top looks imminent, but because the trend in this market is very bullish now, we might just wait for the final bottom and buy the start of a new medium-term cycle and ride a bullish rally into the middle of the year. For now, we will not chase this rally, and we will remain on the sidelines of the broad stock market.
Crude oil broke and closed above its 15-day and 45-day moving averages on Friday. While this is bullish behavior, we note that prices are still below the strong resistance at $75 (Feb. contract chart), and we are about to enter a very strong general reversal zone that precisely over laps another reversal zone specifically for crude coming up next week (Jan.23 - Feb. 1). Unless these reversals correspond to a "break-out" in crude (possible, but not likely), we could see prices turn back down from an isolated high anytime in the next two weeks. If prices can rally significantly above $76.18 before turning down, it could confirm the low of Dec. 13 ($67.98) as the start of a new bullish medium-term cycle. Otherwise, we expect prices to go lower before we see a significant medium-term cycle bottom, and possibly a 4-year cycle bottom at or below $65.24. We remain on the sidelines of crude oil.
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