Nonstop rain and flooding this winter (easily predicted by constant coverage of how California was going to be in a century-long-drought at that you-know-who blog) created big delays in airport travel last night, meaning that my pickup of family members at the airport didn’t happen until, oh, three in the morning. Having gone to bed at 4:30 a.m., I’m bright-eyed and bushy-tailed on this pitch-black morning.
Anyway, gold (which I am bearish by way of a DUST position) is down nearly ten bucks as of this writing. Breaking that blue trendline would be a very good thing.
It looks like another day of record highs across the board for equities. I’ve become inured to it by now. I’m particularly focused on what oil is doing, since apparently the OPEC production cuts are enjoying nearly full compliance, which is compelling oil to make yet another trust at the top of its range. It simply cannot seem to escape this very tight range, and OPEC has at a minimum done a great job creating a rock-solid floor for oil.
Yesterday was clearly a good day to introduce my new Jack in the Box continuation/flag pattern. The double bottom broke down slightly and has then reversed back into a full test of 2299.40. The full ATH retest at 2300.99 is VERY close and should be tested today if we are going to see that full retest. SPX 60min chart:
It seems that I don’t post very much on oil (or Natural Gas, for that matter). These are covered each weekend in NFTRH; but yes it’s true, I give oil and energy short shrift in public posting. Probably because I have other higher priority interests right now.
But a subscriber asked about shorting oil in light of the fading efficacy of the OPEC deal, Elliott Wave’s (I assume he means EWI) apparent target of $56 with a crash due thereafter, and Sentimentrader’s high risk sentiment reading. So let’s look into it.
WTI Crude Oil is bullish above key support by daily chart.
There’s not a lot going on this morning, but oil is kind of interesting, down nearly 2.5% as I’m typing this due to concerns that the U.S. producers will be ramping up their output due to stronger prices. For weeks now, oil has been in a very tight range of only about $2. The key, though, is the lower end of that range – about $52 – because, if broken, we could finally see the uptrend snapped and move back into the upper 40s, dragging energy stocks down with it.
First published Sun Jan 1 for members of ElliottWaveTrader.net: Last weekend (Christmas weekend), I noted that set ups such as we have been seeing in the GDX usually lead to strong rallies which can see a 10% move higher quite quickly. Since then, the GDX ran 19% from its recent lows, with Thursday (Dec 29) alone seeing a 7.5% rise. Yes, these divergent set ups can provide for powerful reversal reactions. But, it does not mean we are out of the woods just yet.
In fact, silver still is quite weak, and gold has not yet convinced me either. Moreover, one does not have to make this very complicated at this point in time when one views the daily chart on the GDX. As many of you, as well as the rest of the market, have been seeing the downtrend channel we have developed in the GDX, we cannot gain escape velocity until we are able to clear that 22.50 region.