UPDATES ON THE BROAD STOCK MARKET and CRUDE OIL (11:30 pm EST)
In my last post on the broad stock market (Jan. 5), I wrote:
"These three indices [DOW, S&P 500, NASDAQ] began new medium-term cycles in late November 2025, so all three cycles are young and potentially bullish. A corrective sub-cycle dip is now due, and it may have already happened with that 4-day drop into Jan. 2. If so, we could now see more rallying and a chance for the S&P 500 and NASDAQ to make new all-time highs as we move into our next strong reversal zone coming up Jan. 13 - 23."
We did see more rallying into Jan. 12, but only the DOW and S&P 500 made new all-time highs, while the NASDAQ stayed (not far) below its all-time high of 24,020. After a one-day dip last Wednesday, all three indices bobbed back up but did not make any new highs. We are now in the center of that strong reversal zone (Jan. 13 - 23), so a significant top could be forming. If the NASDAQ stays below 24,020 next week, our intermarket bearish divergence signal will stay intact, and a top would likely form before Friday. If it does, the depth of the correction that follows will indicate whether or not this market will turn bearish. For now, we are staying on the sidelines.
Crude oil most likely started a new medium-term cycle with its low of $54.89 on Dec. 16 (Feb. contract chart). From there, it rallied to its first sub-cycle crest on Jan. 14 at $62.36. That crest was inside a reversal zone specifically for crude (Jan. 6 - 15) as well as a general reversal zone for all markets (Jan. 13 - 23). A steep drop followed, but prices seem to be stabilizing around $59 - just above the 15-day moving average. We could easily see a sub-cycle bottom form next week. If it stays above $58, there's a good chance the trend will turn bullish with higher prices still ahead.
I am still on the sidelines of crude oil until we are more certain of the cycle trend.
In my last post on the broad stock market (Jan. 5), I wrote:
"These three indices [DOW, S&P 500, NASDAQ] began new medium-term cycles in late November 2025, so all three cycles are young and potentially bullish. A corrective sub-cycle dip is now due, and it may have already happened with that 4-day drop into Jan. 2. If so, we could now see more rallying and a chance for the S&P 500 and NASDAQ to make new all-time highs as we move into our next strong reversal zone coming up Jan. 13 - 23."
We did see more rallying into Jan. 12, but only the DOW and S&P 500 made new all-time highs, while the NASDAQ stayed (not far) below its all-time high of 24,020. After a one-day dip last Wednesday, all three indices bobbed back up but did not make any new highs. We are now in the center of that strong reversal zone (Jan. 13 - 23), so a significant top could be forming. If the NASDAQ stays below 24,020 next week, our intermarket bearish divergence signal will stay intact, and a top would likely form before Friday. If it does, the depth of the correction that follows will indicate whether or not this market will turn bearish. For now, we are staying on the sidelines.
Crude oil most likely started a new medium-term cycle with its low of $54.89 on Dec. 16 (Feb. contract chart). From there, it rallied to its first sub-cycle crest on Jan. 14 at $62.36. That crest was inside a reversal zone specifically for crude (Jan. 6 - 15) as well as a general reversal zone for all markets (Jan. 13 - 23). A steep drop followed, but prices seem to be stabilizing around $59 - just above the 15-day moving average. We could easily see a sub-cycle bottom form next week. If it stays above $58, there's a good chance the trend will turn bullish with higher prices still ahead.
I am still on the sidelines of crude oil until we are more certain of the cycle trend.
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