CRUDE OIL TRADE ALERT and BRIEF MARKETS UPDATE (10:30 pm EDT)
It looks like it is a good time to take profits in our long crude oil position (which we entered on Sept. 26 around $44.50). Last week crude prices topped out at $51.60 (November contract chart) and then fell off sharply to close the week just above $50. While it is possible for prices to push higher over the next week or two, that top could be the peak of crude's current subcycle, and if so we could easily see prices move lower into the next reversal zone coming up at the end of this month. Because we already have a good profit on this trade, I am going to sell my long position in crude at the opening of tomorrow's market. If we do get a significant low in the last week of October, we will consider buying again as long as prices hold above $44; however, should prices push higher into that time, it may turn out to be a good opportunity to sell short. We will have to wait and see how the market moves. There is significant resistance in the $51 - $52 area. Selling all crude oil long positions tomorrow morning.
The broad stock market fell sharply last week. Unless equities can manage a strong rally this week, it looks like this market could be moving towards a medium-term cycle bottom in late October/early November (or possibly late November). We will watch carefully how the DOW, S&P 500 and NASDAQ move into the end of this week. On the sidelines of the broad stock market for now.
In last Monday's blog on gold and silver I wrote:
"Last week's sudden price plunge in silver (and gold) forced us to relabel silver's chart pattern as an older medium-term cycle (instead of a newer one) that, like gold's, should make a final cycle bottom this week or next. To stay bullish, silver needs to stay above $15.83 (which was the start of the cycle on June 1). If silver or gold (not both) break below last week's low while the other stays above its low from last week (intermarket bullish divergence) then we may have a good signal to buy this week or next."
There was no intermarket bullish divergence last week so we will watch for it this week. A good price target for silver would be around $16. Still on the sidelines of both gold and silver and waiting for a cycle bottom to buy.
It looks like it is a good time to take profits in our long crude oil position (which we entered on Sept. 26 around $44.50). Last week crude prices topped out at $51.60 (November contract chart) and then fell off sharply to close the week just above $50. While it is possible for prices to push higher over the next week or two, that top could be the peak of crude's current subcycle, and if so we could easily see prices move lower into the next reversal zone coming up at the end of this month. Because we already have a good profit on this trade, I am going to sell my long position in crude at the opening of tomorrow's market. If we do get a significant low in the last week of October, we will consider buying again as long as prices hold above $44; however, should prices push higher into that time, it may turn out to be a good opportunity to sell short. We will have to wait and see how the market moves. There is significant resistance in the $51 - $52 area. Selling all crude oil long positions tomorrow morning.
The broad stock market fell sharply last week. Unless equities can manage a strong rally this week, it looks like this market could be moving towards a medium-term cycle bottom in late October/early November (or possibly late November). We will watch carefully how the DOW, S&P 500 and NASDAQ move into the end of this week. On the sidelines of the broad stock market for now.
In last Monday's blog on gold and silver I wrote:
"Last week's sudden price plunge in silver (and gold) forced us to relabel silver's chart pattern as an older medium-term cycle (instead of a newer one) that, like gold's, should make a final cycle bottom this week or next. To stay bullish, silver needs to stay above $15.83 (which was the start of the cycle on June 1). If silver or gold (not both) break below last week's low while the other stays above its low from last week (intermarket bullish divergence) then we may have a good signal to buy this week or next."
There was no intermarket bullish divergence last week so we will watch for it this week. A good price target for silver would be around $16. Still on the sidelines of both gold and silver and waiting for a cycle bottom to buy.
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