Saturday, January 23, 2016

Bottom in Oil?

Welcome back loyal blog readers.

It was a tumultuous week and the markets appear to have put in a least a short-term bottom.

Wednesday's price action was wild - at one point down 65 points S&P points, just to rally most of the way back. It had the feeling of a panic flush to the downside, a cleanse to shake out the last of the weak longs.

Lately it seems the price of oil has been leading the stock market, and needless to say its been brutal of those in the oil production business and stocks alike.

Anyway, I bring it up because the Crude Oil Futures (/CL) is at the 423% line at the bottom of the sequence.  So this is an important level at which we expect some type of price deflection off of the line giving some relief for the oil longs and oil stocks.  Plus we are approaching a seasonal low in energy prices in mid-February.  But given the adequacy of the supply, it could still be quite some time before supply and demand come back into balance and put a bid under energy prices.

In the meantime, enjoy the low oil prices and good trading.

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