The NASDAQ never did make a new monthly high last week as did the DOW and S&P 500 so our bearish divergence signal remained intact as all three indices fell on Friday. The broad stock market could continue to fall into next week's reversal zone (Aug. 20 - 28). A good price target for a significant low then would be at least to 25,000 in the DOW and even as low as 24,250. For the S&P 500 a good target would be around 2,750. But so far this week the market doesn't seem keen on falling. There is still time for all three indices to rally into next week's reversal zone and make new highs. If they do that (and especially if one or two make new highs, but not all three) then we may get a good opportunity to sell this market short. The chances for a high or low next week seem equally balanced at the moment so we will just have to wait and see how these indices move into the end of this week. Still on the sidelines.
We enter another reversal zone for crude oil tomorrow (Aug. 15 - 28). Crude prices have been fairly flat over the last several trading days so its hard to tell if we will get a high or a low for this reversal. As with the broad stock market, we will have to wait and see how prices move this week and next. A rally to the $72 - $74 area (Sept. contract chart) would likely set up a good shorting opportunity, but if prices fall, we may be looking at a low to buy (as long as that low stays above $63). On the sidelines of crude oil for now.