A nice example (by way of crude oil) has a trendline changes roles from resistance (red arrow) to support (green arrow).
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Holding Pattern
It’s becoming increasingly difficult to wax poetic about a market which isn’t doing anything. Just look at what’s happened over the past ten weeks on the ES……..no net change:
Sure, it’s had its ups and downs, but the market is, on the whole, trendless.
Symmetry
SPX made a marginal lower low yesterday as expected and then rallied back into main resistance at the daily middle band, which closed yesterday at 2158/9, with the 5dma and 50 hour MA slightly above in the 2161/2 area. SPX closed a handle above the middle band but in practical terms I count a close less than two handles away from the band as a close on it.
One thing you often see in this kind of situation is a kind of symmetry where unusual setups can repeat several times in a short period and we might have a situation like that here. The last two times that the middle band was tested SPX gapped through it and at the open today SPX has gapped through it again. Both of the last two gaps were breakaway gaps that did not fill that day or the day after. We may see that again today and, if so, that would be a strong start to the ATH retest that we are expecting. SPX daily chart:
Crude Oil About to Hit a Slippery Spot?
Contributed by Rohit Goel
Crude Oil prices have been on a wild ride over the last couple of years, dropping from $100+ in late-2014 to $26 in early-2016, then miraculously doubling over the next few months. As the Energy Information Administration (EIA) explains, there are several factors influencing oil markets, such as production, economic growth, geopolitical and economic events, supply disruptions, speculator and money manager positioning etc. In addition, US Dollar also has a significant inverse relationship to oil prices.
However, the major reason for oil’s plunge since late-2014 was Saudi Arabia blocking an OPEC output cut in November 2014, with the intent of pushing oil prices lower, inflicting serious pain on the US shale oil industry (which needs high oil prices to break even) and increasing their own market share – so essentially, increased supply. The best gauge of how this increased supply has caused an imbalance in the global oil market is the EIA inventory report, which is released every Wednesday morning and has a big impact on oil prices. So let’s compare the price of WTI with the EIA inventory, starting in Jan 2013 when the market was in a steady state and remained so for the next year and a half (the period highlighted in yellow denotes the peak summer driving season – more on this later):
(Note from Tim: there appeared at this point a very large table, which I’m going to leave out, since the information is expressed in graph form anyway). (more…)
