I went long crude oil earlier today, but this isn’t a long-term trade. I think that USO, shown below, has a good shot at closing the gap, but it’s likely to resume its much broader downtrend.
SPX closed back over the 5 DMA yesterday and unless a war starts in the next few minutes, looks likely to gap up hard at the open today. Bulls need a green day today to confirm a likely retrace low and after that SPX should be off to the races for the rest of December. If this is a true breakaway gap then the opening gap today will not fill. Daily middle band resistance is at 2045. SPX daily 5DMA chart:
It can be difficult to identify the pattern for an advance or decline, though at the least it is usually clear in retrospect. Sometimes, as with the move up from 1820, it can be hard to identify even then. This retrace hasn’t been as hard as that, but has been a tough road to identify with these fast whiplash moves and a total of three decent falling channel candidates having established so far. The first that I posted yesterday broke up in the morning, the second had me looking for another two handle move up from the intraday high that never came. The third one however was clear by the end of the day, and with the quality of the trendline anchors and fit so far I’m very confident this is the correct one.
I have channel support in the 2013 area at the moment, declining obviously, and we have see channel support hit this morning. if we see a break below then I’ll be treating that as this channel breaking down, possibly evolving into a falling megaphone, and I’m not sure where the next support above 1998 (50 DMA) might be. Unless we see that break I’m a buyer at channel support, though we may well see a bounce before a hit there. SPX 60min chart: (more…)
My answer? Maybe. Not so helpful, eh? I will say this, however: we are at levels now not seen since the deepest depths of the financial crisis (remember that? It was about 300 years ago or so). I think energy is in serious trouble long-term, but I’ve stepped up with a medium-sized long position. Oh, and hey, Slope Plus folks – regarding the idea from a couple of days ago – I am long that position too.
As one of the countless free services I offer my readers, here is a list of stock symbols you can download of the Most Levered Energy Companies referenced in this ZeroHedge article. You’re welcome.