CRUDE OIL TRADE ALERT and MARKETS UPDATE (2:30 pm EST)
The DOW, S&P 500 and NASDAQ edged up a bit in early trading today and all made new highs, but this week's rally appears to be slowing down and may be rounding over for some sort of correction. Technically, yesterday was the end of the reversal zone, but a top today would be acceptable. If these indices push higher tomorrow, however, we could see a "blow-off" rally into the end of the month. The current cycle pattern in the DOW allows for this, but the S&P 500 has a sub-cycle low that is due this week or next. This is why I think these markets can turn down now. (A dip to the 2,280 area in the S&P 500 would be a good target). If we get this dip, we can look to buy, but if the rally continues unabated, we may be looking to the Feb. 22 - March 7 reversal zone for the top of the "blow-off" and a spot to sell short. Still on the sidelines of the broad stock market.
In Monday's blog on gold and silver I wrote:
"Based on current cycle patterns, we have two possibilities now for gold and silver. Prices could start rallying again towards a new high and a top likely in the last week of February (the next reversal zone for the precious metals). The other possibility is that gold and/or silver would continue to fall considerably lower and form a bottom in that same time period."
Both metals fell a bit early in the week, but prices are rising today with silver making a new weekly high as gold remains below its high from last week. (This is a bearish signal until gold breaks that high.) Directional momentum is still mixed bullish and bearish in both gold and silver charts so it is still not clear whether we will see new highs or new lows into the end of this month. I am still favoring a low, but that could change as this market is very volatile now. On the sidelines of gold and silver for now.
Crude oil likely made a significant sub-cycle bottom on Feb. 8 when prices dropped to $51.22 (March contract chart). Prices could (should) now rally to challenge the $55 - $56 area and possibly break higher if this market can stay bullish. Any break below the Feb. 8 low ($51.22) would negate this and turn the market bearish. There is also a support level at $52. What we can do here is enter a long position with a close stop loss on a close below $52 (and especially below $51.22). Entering a long position in crude oil today.
The DOW, S&P 500 and NASDAQ edged up a bit in early trading today and all made new highs, but this week's rally appears to be slowing down and may be rounding over for some sort of correction. Technically, yesterday was the end of the reversal zone, but a top today would be acceptable. If these indices push higher tomorrow, however, we could see a "blow-off" rally into the end of the month. The current cycle pattern in the DOW allows for this, but the S&P 500 has a sub-cycle low that is due this week or next. This is why I think these markets can turn down now. (A dip to the 2,280 area in the S&P 500 would be a good target). If we get this dip, we can look to buy, but if the rally continues unabated, we may be looking to the Feb. 22 - March 7 reversal zone for the top of the "blow-off" and a spot to sell short. Still on the sidelines of the broad stock market.
In Monday's blog on gold and silver I wrote:
"Based on current cycle patterns, we have two possibilities now for gold and silver. Prices could start rallying again towards a new high and a top likely in the last week of February (the next reversal zone for the precious metals). The other possibility is that gold and/or silver would continue to fall considerably lower and form a bottom in that same time period."
Both metals fell a bit early in the week, but prices are rising today with silver making a new weekly high as gold remains below its high from last week. (This is a bearish signal until gold breaks that high.) Directional momentum is still mixed bullish and bearish in both gold and silver charts so it is still not clear whether we will see new highs or new lows into the end of this month. I am still favoring a low, but that could change as this market is very volatile now. On the sidelines of gold and silver for now.
Crude oil likely made a significant sub-cycle bottom on Feb. 8 when prices dropped to $51.22 (March contract chart). Prices could (should) now rally to challenge the $55 - $56 area and possibly break higher if this market can stay bullish. Any break below the Feb. 8 low ($51.22) would negate this and turn the market bearish. There is also a support level at $52. What we can do here is enter a long position with a close stop loss on a close below $52 (and especially below $51.22). Entering a long position in crude oil today.
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