Oil Prices in a Slippery Spot
Friday, November 13, 2009 at 02:56PM Out of most of the nonsense I navigated through today, one thing stood out very clear to me, and that was the early weakness in crude oil. It was a whippy ride for the ol' buck today, trading between an important range that will decide the fate of the next directional movement in equities, as seen on the chart below.
The trend is obviously down, this is a continuation pattern, which points down, but the call option activity was a little unnerving.
Who knows; this might be the crew that played the last adjustment in the UUP last week, but it seems like a sensible bet if you are trying to pick a bottom in the dollar.
Anyway, back to crude oil.
We've been tracking the recent range in oil, and the importance of the $77 level.
A break of this level puts oil on a sell signal, and will send it back towards support, which from here would be roughly $72-73 (Dialed down to a 0.50 box size, it's on sell signal). The $WTIC reached a low of $76.27, but looking at the chart of /CL, you can see how support was broken, and then retested on the downside.
It's entirely possible that the $80 level is tested one last time, but that is the extent of the upside I would be looking for. From there, I am looking for a bigger correction. If you have been watching the oil service sector, this is where you will find an abundance of developing head & shoulders patterns, and a group of stocks who were unwilling to participate much of the last leg up in equities. Also, take a look at the bullish percent in the energy patch.
Bear confirmed.
The individual stocks in the energy patch are only a breath away from taking out key support levels. As we see the dollar resolve its range next week, into a break higher, short oil and oil service stocks.
I'll tap this topic a little more on my watchlist this weekend.
Long: After hours blogging.
Short: CRZO, WFT, BHI, NOV, etc, etc.
Disclaimer: Beware of the dollar. It could ruin your week next week.
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Response: Oil Prices in a Slippery Spot: Part DeuxIn my epic debut, returning to the blogosphere after a year long contractual hiatus, I returned to put
Reader Comments (12)
Nice analysis Jeff... volume profile shows the dollar attracting a lot of attention at these levels as well... http://chart.ly/6znpaf
Very good analysis.
On a side note, let me also commend you for not using disqus which practically everyone else in the finance sector blogging world seems to have fallen in love with.
I sincerely like the way you don't have a bias to being a bear or bull. You read the charts and try to give an explanation to what you see and how to take action on it. Excellent.
Good to see you back...and discus is fine for bloggers, builds traffic
Great analysis....Thanks for coming back....Adergaard said it right...you analyze charts without a pre-determined bias which is rare in the blogging world. This is great.
So glad to see you back Gorilla. The blog-o-sphere was really missing something without you being around. Looking forward to some good ol' OA action....
Skål!
UUP call option activity due to structural inefficiencies in the etf, not necessarily directional bias in the dollar.
I'm not saying the dollar can rally, but call option volume in UUP not a supporting reason.
Good to see you back!
Steve,
I attempted to make reference to that
'Who knows; this might be the crew that played the last adjustment in the UUP last week, but it seems like a sensible bet if you are trying to pick a bottom in the dollar."
OA
Jeff- Welcome back!! This place was THE best & I have to say "thanks" for coming back (uhhmm post above awesome). The wealth of infomration & your willingness to share w/us can never be reciprocated. I only hope some of the fun & knowledgeable characters come back ... VaBeachGirl, the "Grandma" guy, Jorge, Berk, Sledge, Benji who always asked you ?'s that pissed u off, DojiGirl, Raimo, Duuude, SpartaC, Liz/Grant, rossmueller, Molecool .... and I know i'm forgettting a ton. Thx & be well.
Great post on oil, OA. Feels great to have the blog back
Most excellent recap on oil and the dollar. Looking very much forward to the 'afters'. ; )
PS: I think the 'subscribe to all comments' still references the .rss link for Disqus feed. You think you're gonna use Disqus or no? (I really care for the 'points' BS, and I could take or leave the nexted comments)
..didn't care... for the 'points'..
Great read on oil.
Thanks