I notice that Whole Foods is dropping after hours. This actually lines up with an analog I’ve been following for years now. My belief is that the market is oh-so-subtly beginning to ape its behavior before the financial crisis, with Whole Foods being just the latest example. I suspect much lower prices are in — umm – – “store”.
Apparently selling stuff for 300% what you could pay it for at Ikea isn’t a great business model………not that I didn’t mention it before when the price was three times higher.
It is remarkable that crude oil has managed to hold its Jan-Feb coil support line in the aftermath of two huge builds in the inventory data. That said, however, I keep thinking that Saudi Arabia (and OPEC) are under the market on every $2-$3 decline to preserve the integrity of “The Agreement” and also to support prices into the Saudi-Aramco public offering later this year.
Whether or not there is any truth to my suspicions, the fact remains that for the time being, the high-level coil-digestion formation remains intact and viable, and as long as that is the case, the overall set-up in oil is bullish and in a holding pattern awaiting upside continuation to $56.00 and then to $61.00. Only a reversal and break below $51.22-$50.71 support will wreck the set-up.
I don’t normally monkey around with leveraged ETFs, but I was so enthralled by energy’s weakness, I had built up a big long position in ERY (as mentioned in my Lake Erie post on Tuesday). Last night, I calculated the measured move on it, drew a horizontal line, and watched it closely. Wednesday morning, before the inventory report, ERY nailed its target, so I GTFO in a big hurry. Thank goodness, eh?
Oh, and, umm, this tweet from this morning kind of sealed the decision for me:
I mentioned the somewhat bearish opening setup on SPX/ES yesterday morning and that’s still looking somewhat bearish. On the bear side on SPX, though the hourly RSI 5 sell signal has now reached target, a small double top has broken down with a target in the 2276/7 area and that could be the target today. On the bull side though …….
Stan & I are starting work on the book we are writing and Stan and I both have a few pattern setups to name as we write them up for the book. One of those for me is double tops and H&S reversal patterns that break support and then fail into trend continuation. These tend to fail hard into a high probability target at the top of the failed pattern (at highs, vice-versa at lows). These happen a lot and longer term readers will recall me mentioning these many times over the last few years. My working title for these as continuation patterns is a ‘Jack In The Box’ Continuation. We may well have one of those here and, if so, that would set up the full all time high retest that we are expecting this week.
As the majority of the metals market seems to be awaiting a “pullback,” the metals market, like the equity market, has been quite stingy. But, as I noted in my mid-week update, “by no means am I going to say that I “expect” more of a pullback to be seen, as the minimal number of waves are in place right now to support a break out in the complex within the next few trading days.” I am still of the same perspective.
On Friday, I did an interview for a financial show, and prior to that interview, the interviewer me told me that most of their guests, who are normally bullish the metals complex, do not think that the metals are going to be breaking out anytime soon. In fact, he was quite surprised when I explained to him that I see a set-up which can ignite a strong rally in the metals complex at any time now.