The markets continued their same old ways on Friday by hanging around
their highs despite volumes on the lighter side of things. That should
start to change this week though with a key options expiration period
set for this Friday.
Although NASDAQ futures were off early, both the DOW’s and the
S&P 500′s were up early on what appears to be strength in
commodities, specifically oil, which has already breached the $49 level
to the upside, a level we previously suggested should serve as
resistance.
Provided a below is daily chart of light crude showing you the snapback move it has made since our bottom call a week ago Friday. All good there for those of you who got long oil, but now would be the time to either close out the trade, or at the very least move your SSL way up in any bullish leveraged oil ETF you might have open.
As you can see here, not only is oil fast approaching a key 5/8th’s retracement level, the area circled here also represents a confluence area – with the 50 day moving average (green line), the 200 day moving average (red line), and the 25X5 DMA (purple line) all converging around a single level just shy of $50 per barrel.
Basically, we expect oil to pullback now, so if you’re interested in flipping back into a bearish leveraged oil ETF like SCO, there’s definitely some good technical context right now to suggest a reversal around current levels. How much of a reversal will be the bigger question though. Here’s why…
This might seem a little odd, but if we don’t rely solely on oil’s chart to try and determine what oil’s going to do, and we peel apart the DOW and the S&P 500′s daily charts to assist in the analysis of oil right now, there are a few mixed messages.
Both the DOW and the S&P 500 appear to now be breaking new ground to the upside, but whether or not oil is going to participate is a major issue for energy stocks right now. Although one would have to think oil would assist in moving those major averages higher, it’s not absolutely necessary.
Provided a below is daily chart of light crude showing you the snapback move it has made since our bottom call a week ago Friday. All good there for those of you who got long oil, but now would be the time to either close out the trade, or at the very least move your SSL way up in any bullish leveraged oil ETF you might have open.
As you can see here, not only is oil fast approaching a key 5/8th’s retracement level, the area circled here also represents a confluence area – with the 50 day moving average (green line), the 200 day moving average (red line), and the 25X5 DMA (purple line) all converging around a single level just shy of $50 per barrel.
Basically, we expect oil to pullback now, so if you’re interested in flipping back into a bearish leveraged oil ETF like SCO, there’s definitely some good technical context right now to suggest a reversal around current levels. How much of a reversal will be the bigger question though. Here’s why…
This might seem a little odd, but if we don’t rely solely on oil’s chart to try and determine what oil’s going to do, and we peel apart the DOW and the S&P 500′s daily charts to assist in the analysis of oil right now, there are a few mixed messages.
Both the DOW and the S&P 500 appear to now be breaking new ground to the upside, but whether or not oil is going to participate is a major issue for energy stocks right now. Although one would have to think oil would assist in moving those major averages higher, it’s not absolutely necessary.
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