Crude oil has continued to fight its way higher, and it’s become dangerously close to violating an important resistance level. I want to emphasize “close to”, since it hasn’t done it yet, but it merits close monitoring.
The reason I say this is because my entire basis for being disposed to bearishness on energy stocks is predicated on the right triangle top. This has been a reliable top, long-term, for crude oil for many years, and frankly it needs to weaken immediately for things to stay squeaky clean.
In contrast to this, heating oil (/HO), the only chart I’ve ever seen which actually follows a sinewave, is still shaping up nicely as a long-term long position. I don’t know enough about the energy markets to know if weak crude and strong heating oil is a contradiction, but that’s what the charts suggest.
In any case, just as /CL is close (but not above) its point of violation, likewise the ETF symbol XOP is in the same situation. On the one hand, it’s a beautiful topping pattern, and yet on the other, it wouldn’t take much more strength to spoil the prospects for this setup.
