CRUDE OIL UPDATE (2:30 pm EDT)
Crude oil prices broke to a new high ($89.37, Oct. contract chart) today just one day out of its reversal zone (Sept.1 - 11). With a round number resistance at $90, crude could certainly turn down from here. But if the top doesn't happen today, we enter a general reversal zone for all markets tomorrow (Sept. 13 - 21), and a top could happen anytime inside this window.
As I've mentioned in previous blogs, we can now confirm that crude started a new longer-term 3 year cycle with its deep "double-bottom" lows of $64.42 on March 20 and $64.58 on May 4. This means crude prices should be bullish for many more months. Shorter-term, it looks like a new medium-term cycle in crude started with the low of $77.59 on Aug. 24, but there's a small chance that we are still in an older medium-term cycle that started on May 4. Either way, a top and a corrective downturn seems imminent. If this IS an older cycle, the correction could be steep and take prices down to the 45-day moving average (now around $81). That would be an ideal place to buy, but I don't think it will happen. It's more likely this is a younger, new cycle that started on Aug. 24 and that any correction now will be modest - especially as this market seems very bullish right now. We will remain on the sidelines as we wait for a corrective low to buy - possibly inside the new reversal zone this week or next.
Crude oil prices broke to a new high ($89.37, Oct. contract chart) today just one day out of its reversal zone (Sept.1 - 11). With a round number resistance at $90, crude could certainly turn down from here. But if the top doesn't happen today, we enter a general reversal zone for all markets tomorrow (Sept. 13 - 21), and a top could happen anytime inside this window.
As I've mentioned in previous blogs, we can now confirm that crude started a new longer-term 3 year cycle with its deep "double-bottom" lows of $64.42 on March 20 and $64.58 on May 4. This means crude prices should be bullish for many more months. Shorter-term, it looks like a new medium-term cycle in crude started with the low of $77.59 on Aug. 24, but there's a small chance that we are still in an older medium-term cycle that started on May 4. Either way, a top and a corrective downturn seems imminent. If this IS an older cycle, the correction could be steep and take prices down to the 45-day moving average (now around $81). That would be an ideal place to buy, but I don't think it will happen. It's more likely this is a younger, new cycle that started on Aug. 24 and that any correction now will be modest - especially as this market seems very bullish right now. We will remain on the sidelines as we wait for a corrective low to buy - possibly inside the new reversal zone this week or next.
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