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“Moments ago”, as Tyler likes to say, the crude oil inventory report came out, and – – much to my relief – -it did not soar (although, weirdly, 30 seconds before the report, it DID soar, and I was wondering if someone had screwed up……….but I guess it was just stop-running). Anyway, the market is still digesting the news, but as of now, we still haven’t really budged since the Big Black Down Day a week ago. Since then, we’ve just been hanging out at $46 or so.
Here we are, on another one of those ostensibly “big days” in which all kinds of geopolitical events are supposed to turn the markets upside down. Meh. If there’s anything consistent about the past few years, it’s that these pre-announced big days turn out to be a big box of wet firecrackers, and the handful of actual market-moving events some along completely by surprise out of nowhere (like the brief, but enjoyable, Trump Dump from a few weeks ago).
Anyway, at least our old friend crude oil is always there to move to and fro with gusto. A key support price level is rapidly approaching, and a failure of that line could cause the energy bear market I’ve been milking to really kick into high gear. It’s nice when global, natural market forces actually overrun the efforts of OPEC to artificially prop up oil into lofty fakeness.
The long-term chart below of Crude Oil shows a potential reverse Head & Shoulders pattern that has formed since the end of 2014, with a high-level tug-of-war occurring above the light green shaded area (just above a 78.6% Fibonacci retracement level and within the upper half of a declining channel) at 43.50 since mid-2016.
At the moment, we see major indecision around the 50.00 level (50 & 200-day moving averages).
A breakout and hold above the reverse H&S pattern neckline around 57.00 would be significant, inasmuch as we see a confluence of major Fibonacci, channel, and price resistance at that level. I’d call that Oil’s sweet spot.
Well, some mixed emotions this morning. A lousy jobs report has gold soaring, the dollar crumbling, and the rally in equities zeroed out (for now). As I am typing the ES remains green, just barely, but there’s a lot of action elsewhere. I’ve got 48 short positions and am about 180% margined, so it could be a good day for the bears.
Crude oil in particular — almost always our friend – – has resumed its hard slide, and on an intraday basis, you can see that it’s not exactly looking great for our OPEC buddies:
The “sting” part is that I got stopped out of QID, DRIP, and FAZ yesterday. The QID isn’t a big deal, since it looks like NASDAQ is remaining strong. FAZ is also kind of a “meh”. But DRIP is one I suspect is going to recover mightily today. I scored a 20% profit on it, even having been stopped out, but I think my bearishness on energy is going to play out longer-term.
I’m going to make this post rather fast for one reason: squirrels. You see, the squirrels around town get up at a very specific time, and once they are up and about, it’s all over for me and my dog walk. You’ve never had your arms yanked off quite so swiftly as when a bunch of bushy black tails are scampering around and two very large, strong dogs are intent on pursuing them. So I need to scoot while I have a chance.
In any event, you all know my fixation on crude oil and my bearish positioning on energy stocks. In spite of yet another very green day on ES and NQ, I’m feeling pretty good about this morning, because crude continues to weaken. It seems that the OPEC meeting this month turned out to be just a fake, fabricated, anti-market contra-trend joke, and the true direction of commodities has resumed. I remain gleefully long ERY and DRIP and short a hodgepodge of energy issues, each of which I detailed last weekend.
