US stocks are seasonally bearish from May to October. In years such as 2021, when US stocks rise in May and June, they occasionally peak in August and decline into October. Crude Oil has a seasonal bullish pattern from June until August then declines into December.
The Coronavirus recovery is probably the reason Crude Oil is rising. US stocks are being pulled up with the Crude Oil rally. I say "pulled up" because the Crude Oil rally is more robust than stocks. Crude Oil from its 2020 bottom has rallied in a clear Elliott five wave impulse pattern and appears to be in the fifth wave.
A .50 retracement from Crude Oil's all-time high is 82.91. A .618 retracement from Crude Oil's secondary top of 115.27 is 77.60. This zone is just above chart resistance at 76.72 - the October 2018 peak.
If Crude Oil tops in August it could complete the five-waves up from 2020. If so it could begin a multi- month decline. US stocks have been slowly rising, and my more extensive writings have detailed several bearish momentum signals.
A multi-month decline in Crude Oil could be the final straw that breaks the back of the US stock bull market.
Great work Mark! Keep in mind that crude oil inventory draw downs have been substantial in the last 3 months. This is something that many technical analysts aren't observing at the moment. Check out the data from Energy Information Administration. If WTI can make it past your Fibonacci resistance zone, then that could mean we'll see a much longer wave 5, which is valid because wave 3 will not be the shortest.
Good explanation and overall outlook. Agree with the OIL, and most US indices are likely to have some bearish move soon. thx
bappykhalidhasan0
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great work
PejiKian
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Do you think S&P500 and Nasdaq will crash soon by 5-10%?
markrivest
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@PejiKian,
Both indices could start a 5 to 10% very soon. Internal and external momentum is very bearish, yet the indices continue rising.
A decline could begin any day, be patient. If a top forms it could lead to something bigger than a 10% decline.
PejiKian
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@markrivest, Thanks for that view, when do you think it would be advisable to short the Nasdaq maybe next Monday? The earnings are coming soon...
markrivest
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@PejiKian,
Hi
My website has an SPX potential topping zone.
I will be giving detailed updates on the website.