Just a quick post before the opening bell rings: it’s good to see all the red on the screen this morning, although recent experience (yesterday!) shows that it really doesn’t mean a thing.
The JOLTS report is going to come out half an hour after the open, so we’ll see if that V’s the market like yesterday. (Of course, the V yesterday was based on absolutely nothing, so who knows). Suffice it to say, for all its attempts to do so, the /ES has not found the power to clamor back up to its Fibonacci at 5650.
The small caps, /RTY, have reached their own Fib (repeatedly!) albeit at a much lower level, since small caps have been vastly weaker than their larger compatriots. I have an IWM short, so this is good to see. Although not shown here, the /NQ is the weakest of all, down about 2/3rds of a percent as of this composition.
The longer-term picture of the /RTY illustrates its powerful reversal potential. That is an impressive amount of overhead supply, highlighted in pink.
Of especial interest to me, and the source of this post’s title, is crude oil. I have been harping about crude oil’s potential to reverse for the past week, and it has indeed been persistently selling. Right now, the front month is down almost 2%, which portends good fortune for my energy shorts.
What I would point out is something that I haven’t seen mentioned anywhere else, which is that crude oil is beneath the Mother Of All Overhead Supply Zones. This sucker spans back for years and years, and I think is illustrative of the absolutely vacuum the global economy is about to enter. The popular notion is that commodities are undervalued and ready to rock. I have the diametrically opposed viewpoint.
I’m relatively lightly positioned at about 120%, so let’s see how the first hour goes and regroup from there.
