Tuesday, May 24, 2011
All the shit blowing up in the Middle East.
Oil is a no-brainer buy right here right?
This guy doesn't think so.
But enough about the fundamentals. Lets go to the important stuff, AKA the charts.
After crude crapped itself from 114+ down to 95 it found a nice little range here of about 5-10 dollars off those lows. There is a bonanza of support at 95: Channels, Fibbonacci retracements, previous important daily gaps, etc. However, it also has good resistance now from 100-105. As previously posted yesterday by Sandwich Heavy Investor here on DCB, we think crude is going to crack that 95 resistance and fall to 85-90 in the next few weeks.
(Note: I bought DTO (2x bear WTI Crude ETN) when the crude hit 100 (per yesterday's advice by Sandwich Heavy Investor in his WTI post). I still have it on.
The Nasdaq was the leader on the way down today (as it generally is). Technically speaking, it looks weak as all hell and has room to run.
We broke back into the old bearish channel (purple) on Monday. Today we rejected the recently broken bullish channel (cyan/ light blue) and highs of the purple channel, as well as the 50 (blue) and 100 (yellow) day VWAP. We also closed significantly under the 50% line from Japan March lows to May 2 high on decent volume.
The current purple channel is my cap to the upside now until proven wrong on a closing basis.
2280 is first support (fib) with 2256.25 (2007 high) being very strong support.
However, I see these eventually cracking and Nasdaq getting to the midpoint of the purple channel sooner rather than later.
(Note: I bought SOXS (3x bear semiconductors ETF) when the Nasdaq popped into that resistance cluster. I normally book those trades same day for a minimal profit. However, I am holding this one for a few days or another good push down.)
SnP was far stronger than the Nasdaq all day and at one point was up on the day when the Nas was down 10+... It is the only index still supported by its 50% from Japan lows to May 2 highs and its 100 day VWAP (yellow). I see the current bearish channel (magenta) as the driver and it will not be able to break out of this to the upside in the near term.
The Fibonacci cluster just south of 1300 as well as the low of the current bullish channel (yellow) will prove to be very strong resistance and will almost certainly produce an initial bounce.
Overall, I am slightly bearish, the least bearish of all the indicees I look at.
2320 is very important. On the daily, it is the intersection of the 50 (blue) and 100 (yellow) day VWAPs, as well as the most recent bearish and bullish channels. As long as we don't put in new highs for the day (currently 2324.25 on the JUN future), I am quite bearish the Nasdaq, with a target near 2245
Should this hour bar close under 1.41 and complete it's shooting star pattern off of the shallow fib at 1.41+, I think it could be a good low risk sell, with a target of 1.3980. Stop if Euro trades above 1.4115. (See previous Euro post for my more long term view)
The following 60 min chart (zoomed and normal) shows that crude has gotten to the top of it's bearish channel (magenta). There is also a confluence of fib levels at this point as well (99.30). Per my last crude post, I would close half of the long here, and drag the stop to breakeven. Target of 101.45 for the rest. 101.50-102.50 should provide significant resistance to this rally. Personally I would sell it. (See previous posts on long term bearish crude thoughts).
It looks like the 1535-1545 level will provide good resistance to this recent rally. I thought the bullish channel break to the downside on May 17 was confirmation of May 2nd being the near term high. With us back in the channel now and above the bearish one (magenta) I think we get to 1525-1545. From there I think if we get higher, we make new yearly highs. If it stalls, I think 1500 or just above becomes the key support yet again.