I’m totally nerding out this weekend on Slope, polishing up the site, adding videos – – the whole Labor Day schtick. In a way, I am re-discovering some of the cool stuff about my little creation. For example, I was just doing a video on the Future Trend feature, and I was quite surprised to see the fascinating sine wave projected for oil. If this is anything close to what’s going to happen, it could mean all kinds of interesting setups! I’m quite short energy stocks now, so I’m particularly pleased.
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Judging by the ES and NQ, it seems the world has already moved on from the big political news about Manafort and Cohen. BTFD to infinity!
So let’s turn our attention to crude oil, which is up over 2% this morning alone. This certainly seems to be the bulliest of the bullish:
Quite a day so far! As I am typing this, the SPY is down 1/10th of a percent, the QQQ is up about 3/10th of a percent, but my all-short portfolio is up 1.4%. I’ve got a variety of energy shorts, and I am watching this trendline with great interest to see if it breaks:
I have a variety of short positions in the energy sector, and one of them today is doing particularly well: Occidental Petroleum, which gapped down below its range.
Commodities have, in fits and starts, been slipping lower in recent months, and on occasion they provide a gap down to make them easier to mark.
The mighty weight of Slope’s bear power has been fully focused in oil as of late, as our beloved and hard working leader called a top on the black gold with accuracy that Dennis Gartman would pay for in U.S. dollar terms. (editor’s note: I’m touched!)
But is it time to pause or reverse? A bit of price and time analysis on the daily chart reveals a potential zone of trouble for bears.
First, let’s look at price.
When the front month contract switched to September on Tuesday evening, price gapped lower on the continuous chart to the top of the zone predicted by prior swing retracements in price amount during this bull market.
Oil is getting hit hard today, down well over 3%. If there was one chart I was watching that helped “call” a peak (and I’ve mentioned it on my Tastytrade show a bunch) it is ERX, which tends to peak and reverse at the horizontal I’ve drawn.
Ironically, probably my best call of the entire year was the one I kept being so embarrassed about: declaring that the crude oil gap at $73.25 would be the peak of a staggering, multi-hundred percent increase in energy over a period greater than two years. Yet that is almost precisely where it flipped around, getting as high as 72.83. Since then, KABOOM, oil has been vomiting all over itself. As it melts past that magenta area I’ve tinted, we have a failed bullish breakout, plain as day.