As I discussed in yesterday's blog, crude oil prices may be making a significant bottom and at least a short-term rally could be setting up now. This market is very oversold and a short-term bull signal is now appearing in crude charts. We are also at the end of a timing window for a reversal in this market so I am going to go for a rally here and enter a long position today. This may turn out to be a short-term trade as we can't be certain a long-term cycle bottom is in yet, and any rally could turn down again to find a lower bottom in the target range of $45-$55. Our stop loss here will be Tuesday's low at $53.60 which is very close to the current price of $54.31 (3:00 pm EST) thus giving us a very good risk/reward ratio for the trade. Long-term traders may want to avoid this trade and wait until we are more certain of crude oil's long-term cycle bottom. Entering a long position today in crude oil for a possible short-term rally.
It appears that the broad stock market is ecstatic over the Fed's and Janet Yellen's comments yesterday which stated that they "can be patient" about the timing of the Fed's first rate hike next year. At the time of this writing, the DOW has gained over 300 points. It is obvious that this market is extremely volatile and thus difficult (and dangerous) to trade at the moment. Short-term bull signals are appearing in the DOW, S&P 500 and NASDAQ charts today, but they are being triggered by the volatile surge and may not be reliable buy indicators; and besides, it is a bit late to jump on the rally now. Have we missed our buy spot? Maybe, but it is still possible for these markets to turn down and reach our original target areas of 16,800-16,900 in the DOW and 1,950 in the S&P 500. I will comment more on this market tomorrow (or over the weekend). Still on the sidelines.