Markets touched the ceiling we mentioned last week, and have turned down.
But the downside action has been limited so far, which seems to be confirming the recent strength.
Let’s have a look at the S&P 500 (click for larger image):
There seems to be a general disbelief about the recent stock market rally. But if the S&P can hold above 1390 in the current lunar Red Period, then we are probably setting up for a further rise to 1450 in September.
As our chart of the week we take a look at the price of Crude Oil (click for larger image):
This is a daily chart, so should be used for the shorter term. Oil prices have rallied strongly since their June bottom, which was indicated very nicely by my Earl2 indicator (red line).
As you can see the Earl2 is now coming into the regions where we start looking for a top. Meanwhile the shorter term Earl (blue line) is showing weakness and turning down already. This usually means that a correction is impending. If oil (CL) drops below $94 , then $85 would become my next target.
Good luck, Danny