CRUDE OIL TRADE ALERT and MARKETS UPDATE (10:30 pm EDT)
Crude oil finally made a new low ($76.15 - July contract chart) last Friday in the center of our reversal zone for crude (May 22 - 31), and today prices shot up to touch $80. Friday's low was most likely the final bottom of our medium-term cycle and the start of a new one. Today's high closed well above the 15--day moving average ($78.53) which should now act as support and discourage a lower low over the next three days of the reversal zone. This looks like a good time to go long as crude still looks quite bullish through the rest of the year. Let's enter a long position in crude for tomorrow's market open. Prices may back down a bit in the morning and give us a better buy spot, but even if that doesn't happen, we want to jump on this potential rally early.
Gold and especially silver prices are rallying up from last Friday's lows. It looks like silver might make a new weekly high or at least a double-top to last Tuesday's dramatic top at $32.38. As I wrote in last Thursday's blog, it is late in the medium-term cycle of both metals, and we are waiting for a 2-5 week decline from a final cycle top. Last week's top in gold may have been the final top, but if silver breaks above $32.38, we may see its top this week. We will want to buy at the final bottoms of these medium-term cycles, as long as they don't go too low. Those bottoms could come in the first or second week of June. For now, we remain on the sidelines of both metals.
The DOW may be completing a legitimate sub-cycle correction from its May 20 high at $40,077 as it has been falling sharply from that top. It broke below its 15-day moving average last Thursday, and today it tested its 45-day moving average. The only problem is that we are not in any reversal zone until next week (June 6 - 14), and the S&P 500 and NASDAQ do not seem to be taking significant corrections (yet). The NASDAQ, in fact, made a new weekly (and all-time) high today without the other two indices, which gives us a bearish divergence signal. This makes me think the DOW's correction and the other two indices could go lower. We will remain on the sidelines of the broad stock market for now.
Crude oil finally made a new low ($76.15 - July contract chart) last Friday in the center of our reversal zone for crude (May 22 - 31), and today prices shot up to touch $80. Friday's low was most likely the final bottom of our medium-term cycle and the start of a new one. Today's high closed well above the 15--day moving average ($78.53) which should now act as support and discourage a lower low over the next three days of the reversal zone. This looks like a good time to go long as crude still looks quite bullish through the rest of the year. Let's enter a long position in crude for tomorrow's market open. Prices may back down a bit in the morning and give us a better buy spot, but even if that doesn't happen, we want to jump on this potential rally early.
Gold and especially silver prices are rallying up from last Friday's lows. It looks like silver might make a new weekly high or at least a double-top to last Tuesday's dramatic top at $32.38. As I wrote in last Thursday's blog, it is late in the medium-term cycle of both metals, and we are waiting for a 2-5 week decline from a final cycle top. Last week's top in gold may have been the final top, but if silver breaks above $32.38, we may see its top this week. We will want to buy at the final bottoms of these medium-term cycles, as long as they don't go too low. Those bottoms could come in the first or second week of June. For now, we remain on the sidelines of both metals.
The DOW may be completing a legitimate sub-cycle correction from its May 20 high at $40,077 as it has been falling sharply from that top. It broke below its 15-day moving average last Thursday, and today it tested its 45-day moving average. The only problem is that we are not in any reversal zone until next week (June 6 - 14), and the S&P 500 and NASDAQ do not seem to be taking significant corrections (yet). The NASDAQ, in fact, made a new weekly (and all-time) high today without the other two indices, which gives us a bearish divergence signal. This makes me think the DOW's correction and the other two indices could go lower. We will remain on the sidelines of the broad stock market for now.
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