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Yesterday was clearly a good day to introduce my new Jack in the Box continuation/flag pattern. The double bottom broke down slightly and has then reversed back into a full test of 2299.40. The full ATH retest at 2300.99 is VERY close and should be tested today if we are going to see that full retest. SPX 60min chart:
It is remarkable that crude oil has managed to hold its Jan-Feb coil support line in the aftermath of two huge builds in the inventory data. That said, however, I keep thinking that Saudi Arabia (and OPEC) are under the market on every $2-$3 decline to preserve the integrity of “The Agreement” and also to support prices into the Saudi-Aramco public offering later this year.
Whether or not there is any truth to my suspicions, the fact remains that for the time being, the high-level coil-digestion formation remains intact and viable, and as long as that is the case, the overall set-up in oil is bullish and in a holding pattern awaiting upside continuation to $56.00 and then to $61.00. Only a reversal and break below $51.22-$50.71 support will wreck the set-up.
I don’t normally monkey around with leveraged ETFs, but I was so enthralled by energy’s weakness, I had built up a big long position in ERY (as mentioned in my Lake Erie post on Tuesday). Last night, I calculated the measured move on it, drew a horizontal line, and watched it closely. Wednesday morning, before the inventory report, ERY nailed its target, so I GTFO in a big hurry. Thank goodness, eh?
Oh, and, umm, this tweet from this morning kind of sealed the decision for me:
Yeah, yeah, I know. Record highs. NASDAQ zooming into the stratosphere. SNAP is going to be a blowout IPO. And so on.
Meh. I’m focused on my own shorts, thank yew. More and more, it’s all about the energy shorts. Happily, the XOP broke – – as ZH might say – – “moments ago”……..
It seems that I don’t post very much on oil (or Natural Gas, for that matter). These are covered each weekend in NFTRH; but yes it’s true, I give oil and energy short shrift in public posting. Probably because I have other higher priority interests right now.
But a subscriber asked about shorting oil in light of the fading efficacy of the OPEC deal, Elliott Wave’s (I assume he means EWI) apparent target of $56 with a crash due thereafter, and Sentimentrader’s high risk sentiment reading. So let’s look into it.
WTI Crude Oil is bullish above key support by daily chart.
