BROAD STOCK MARKET and CRUDE OIL UPDATE (11:45 pm EST)
The broad stock market has been rising this week and we are now exiting the timing window for a likely reversal, so it looks like the August 7 low in the DOW at 16,334 was the reversal point. That was also probably the start of a new cycle in the DOW. We normally want to go long at the start of new cycles because they are initially bullish as they rise to their peak (and then fall again). The problem here is that momentum in the DOW is still nearly 100% bearish and momentum in the S&P 500 and NASDAQ are mixed bearish and bullish. This could be pointing to a weak rally for the start of this new cycle and an early peak and fall. Supporting this idea is another reversal zone coming up at the end of this month when there is a good chance this market will take an overdue deep correction of 10% or more.
So even if this is the start of a new cycle in the DOW I don't expect any rally to last longer than two weeks. In two weeks we will likely be looking to sell the market short. There are some short term technical signals at the moment suggesting the DOW could back down a bit. If it does, I will consider going long for a short-term rally into the end of the month. Otherwise, my main focus will be to sell short any new market high in late August/early September. Still on the sidelines of this market.
Despite ongoing tensions between Russia and Ukraine and all the fighting going on in the Middle East crude oil prices plummeted today nearly $2.00. The reason crude prices seem to be shrugging off major geopolitical conflicts recently seems to be a glut in U.S. oil supplies caused by the shale fracking boom. There is simply an overabundance of crude right now with more supply than demand. The market is therefore more resilient to global supply disruptions caused by military conflicts in major oil producing countries. If this situation persists it may help buffer what could otherwise be a very volatile market, and this should make trading easier (or at least less nerve-wracking). The sharp price drop today confirms my recent observations of the current crude cycle turning down and momentum signals are now 100% bearish in the charts. Prices are now lower than the start of the current cycle on
May 1. Any significant rally now may present an opportunity to sell short, but in terms of timing we are approaching the end of the current cycle. It might be best to wait for the final bottom before trading this market. Still out of this market.
The broad stock market has been rising this week and we are now exiting the timing window for a likely reversal, so it looks like the August 7 low in the DOW at 16,334 was the reversal point. That was also probably the start of a new cycle in the DOW. We normally want to go long at the start of new cycles because they are initially bullish as they rise to their peak (and then fall again). The problem here is that momentum in the DOW is still nearly 100% bearish and momentum in the S&P 500 and NASDAQ are mixed bearish and bullish. This could be pointing to a weak rally for the start of this new cycle and an early peak and fall. Supporting this idea is another reversal zone coming up at the end of this month when there is a good chance this market will take an overdue deep correction of 10% or more.
So even if this is the start of a new cycle in the DOW I don't expect any rally to last longer than two weeks. In two weeks we will likely be looking to sell the market short. There are some short term technical signals at the moment suggesting the DOW could back down a bit. If it does, I will consider going long for a short-term rally into the end of the month. Otherwise, my main focus will be to sell short any new market high in late August/early September. Still on the sidelines of this market.
Despite ongoing tensions between Russia and Ukraine and all the fighting going on in the Middle East crude oil prices plummeted today nearly $2.00. The reason crude prices seem to be shrugging off major geopolitical conflicts recently seems to be a glut in U.S. oil supplies caused by the shale fracking boom. There is simply an overabundance of crude right now with more supply than demand. The market is therefore more resilient to global supply disruptions caused by military conflicts in major oil producing countries. If this situation persists it may help buffer what could otherwise be a very volatile market, and this should make trading easier (or at least less nerve-wracking). The sharp price drop today confirms my recent observations of the current crude cycle turning down and momentum signals are now 100% bearish in the charts. Prices are now lower than the start of the current cycle on
May 1. Any significant rally now may present an opportunity to sell short, but in terms of timing we are approaching the end of the current cycle. It might be best to wait for the final bottom before trading this market. Still out of this market.
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