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Well I am just happening to notice a few things here...
CL1 continuous contract quarterly chart at falling 20MA resistance
CL1 M
On 200MA.
CL1 W
Highest weekly RSI this decade. Last seen with oil above 100.
Cl1 D
Near enough to YR1 / 1HR1 combo; Q1R1 rejection seems about to happen.
RSX
Maybe this is the best vehicle with YR1 and 1HR1 rejections on same day.
Oil has made a surprise move to upside. I actually bought in this past week as I spotted something interesting technically, but didn't write about it in advance as a setup so didn't feel fair to include in the Portfolio tracking project.
CL1 W
Jumped above both long term pivots. There have been 2 other false starts this year so who knows. But right now I'd say this is looking good.
USO
Monthly chart RSI divergence and lower BB tag!
USO W
Above weekly 20MA for the first time in months. 50MA next up, and has flattened out which gives this more chance to clear.
USO W
Low on YS1 which is where portfolio suggested buy for mean reversion, but could after first rally. Above 2HP, so this means some long term strength the first time since 4/10 which quickly failed. If higher then the YP will be critical.
USO D
Plan to hold above the 2HP at 10.05.
When analyzing oil, first there is the choice of chart: Current month contract, continuous contract or ETF. I tend to prefer the latter two.
Sum
While CL1 contract is not a screaming buy, USO looks like a decent speculative buy setup based on: Monthly chart Bollinger band and RSI divergence and just as important 2017 YS1 hold. I don't know if this will get far but if not short (as one could be on USO from 4/20 on) then this is the kind of place to try a rare counter-trend move. Note: I mention these only rarely because the easier money is usually with the trend.
CL1
Huge hold of YP on 5/5, back up to near Q2P, then down from there this time breaking YP, below 1HS1 and now testing Q2S2 with RSI oversold for the 4th period of trading days this year.
Based on this it is hard to make too much case for a buy.
USO
But this looks more interesting from a speculative view. RSI is bang on 30 with nice divergence from previous lows, and price dropping onto monthly Bollinger band with rising slope.
Also, just held YS1 for 2 days. This is what lows look like.
Sum
First test of 2017 YP on CL1 contract was the plunge low and bounce last week. With monthly 20MA also nearby there is some chance of more bounce attempt. But given weakness of the 2016-17 bounce compared to the 2014-16 drop on the monthly chart, oil more likely going eventually lower even if YP holds here. We'll see.
First some long term charts of CL1 contract.
Quarterly
Back under 10MA, and below all the other MAs. On this view, there is nothing to stop this from going lower.
Monthly chart bit more chance of holding with 20MA testing. However, RSI tops at 50 area and weak bounce compared to drop does not make me very optimistic.
Weekly pivot chart
YP chopped in 2016 after YS1 was perfect low and YR1 near the high. Test of 2017 YP last week.
And here's the daily with MAs.
I used to do a weekly post on oil and caught the low here. I am showing the original post right on 2/12 to prove that this wasn't just a hindsight fantasy. No rewind on data chart feed!
Oil had another 2 month rally from early April lows to 6/8-9 highs. After a choppy rest of June, July has been down hard. To my surprise, 2HP didn't even try to bounce.
If oil keeps dropping then stocks more likely to fade, and safe havens resume rally. Oil related vehicles like EWZ and RSX that have put in massive rallies this year should drop, as well as XLE. But if oil rebounds then USA stocks likely continue higher, safe havens maybe more in range, oil related obviously supported too.
For oil we can look at the current contract, but with the rollover I think CL1 continuous is really the definitive chart. We can also look at the ETF USO if we wanted to be thorough.
CL1
Weekly chart with long term levels here. The low was basically a slightly lower low / re-test on YS1 / 1HS1 combo. It rallied to YP / 1HP and after some shuffle went all the way - almost! - to 1HR1. Then fell back to support. YP has broken but I thought the 2HP would at least try to bounce somewhat but instead has caved barring a big rally today which seems unlikely.
Here's the daily chart view with medium term level pivots added. The high was on Q2R1 exact and the YP tried to bounce several times, but look at all those small blue bars (weak buying) before the breakdown.
Daily RSI is the lowest since February and as it turns out DL1 is bang on its daily 200MA here. This is a bad setup for a short, which is just late no matter how you slice it. In fact, the risk-reward here is to play for a bounce, but why waste time trying to buy something below all pivots? Focusing on buying what is above all pivots, as usual, has been the best strategy.
Mostly the ideas in the weekly strategy sum are enough to keep you busy. This is going along with the move in oil today possibly back above its Q2P.
TPP picked off the key low in oil and didn't start saying think about locking in some gains until the second week of March (search on tags). The initial plan was to watch reaction on the Q1P either current or CL1 contract, that the Q1P on CL1 was 2 day weak clear and rejection. That was the trigger to take most gains. But I also thought oil would be good to hold a runner unit above its Q2P, but I was thinking on its current contract. Well that didn't work as it broke down without any bounce. So this was a cut and reverse short. Although I did mention CL1 Q2P had to break for larger position and that held. So really CL1 is giving the best signals, and maybe I should start weighting that as indicator from here.
I didn't like the short setup on the daily chart (CL K) and kept to 1 unit (my base = 20 with 5 or so margin units 125% exposure). Sure enough, oil (CL K) may recover its Q2P again today as the CL1 Q2P held on the low yesterday. I already suggested to watch this for a cut and reverse long. And again to repeat, low was on CL1 Q2P! I just needed to factor this in more in the decision making process. Right idea, wrong vehicle with the CL K contract.
Today I am also watching XLE which will move with oil. RSX and EWZ already had huge moves and will be subject to more profit taking. XLE is holding positive on the year and may clear its AprP. If this happens on daily close good r/r buy setup. Although some of my filters and signs to not take or take small would be a weak up bar with low volume above the level. Of course, a rejection of the AprP and negative on the year would suggest drop to Q2P, but I am not so keen on shorting oil this year. It has been down for 1.5 years, c'mon, damage should be mostly done.
Sum
Recs did a great job of catching low and from early March have recommended to lock in some gains, especially after the CL1 contract tag of Q2P and rejection. But I also suggested runner portions to hold above the Q2P and that was a mistake, as that busted without any bounce. In my view there is no holding and hoping here, any longs with an asset below all pivots with the look of rejection are an immediate scram and then reverse some short depending on total positioning of portfolio. I am not going to link all the recs but you can search on the tag and see for yourself.
Despite the impressive hold on YS1 / 1HS1 combo and huge rally, oil is still in a long-term downtrend ie below YP and 1HP.
CL1 D version showing poke above Q1P and rejection after 2 trading days. Data shows 4/4 only, near Q2P at 35.43.
CLK current contract didn't even reach its Q2P, started AprP below its pivot and quickly broke Q2P. I was hoping to hold runner portions of oil, EWZ, RSX with oil above Q2P but that was wrong idea. Per strategy report, anything below all pivots with look of rejection means no more longs and possible short.
Sum
Despite a 60% rally off the lows on the CL1 contract in about 6 weeks, CL1 did not even tag its long term levels 1HP and YP. It spent 2 trading days above the Q1P and then failed. In other words, from The Pivotal Perspective this rally was weaker than 2015 Q2 advance because that spent the entire quarter above its Q2P.
Oil looks subject to near term pressure, but may open Q2 in mixed condition below long term levels yet above Q2P and AprP. This is just not the best setup for a major new position, but oil obviously impacting the related RSX and EWZ, and likely still correlating to USA stocks as well. No strong opinion here other than to say long term downtrend remains intact. If oil opens above the next medium term levels we'll see how those react. The last two oil posts here and here were indicating pause likely.
CL1 W chart toppy candle last week under long term levels with RSI in downtrend sell zone.
CL1 D chart with 2 days above the Q1P and then fail. These levels only valid through 3/31 however, and it is likely that oil will open above Q2P and AprP. For now the move is more like rejection though.
The current K contract looks more bearish since it did not even come close to recapturing Q1P. Depending on the next few days we could be close to its Q2P and/or AprP.
CL1 Q chart for context near the Q1 close. Held the 2008 low and better to be inside the BB, but relatively weak advance despite the percentage up.
Monthly chart withe the same low marked. Better RSI and BB divergence on the low, and Feb close above the low was some tell for the rally. But 10MA is sharply falling and may be resistance, which would mean next move down.
Last week: "Below 37.04 would risk a larger drop and thus increase the chance of a more significant fade for stocks back under long term pivots. Back above 37.87 would be stronger and invite a near term move to about 40."
There was a 1 day fake-out with close at 36.34, then back above the next day. Price high 41.20, close high 40.20 so far.
Sum
Low of year bang on YS1s but even after all this rally current K contract not above quarterly, half-year or yearly pivot. So, may go a bit higher then running into major long term resistance. CL1 chart 1 day above Q1P but doesn't look convincing. I don't know the next move but like stock indexes running into major pivots, some pause or shuffle is likely but whether that turns into major high, ie rejection and down, or bullish clear, remains to be seen.
For now I would consider CL1 below Q1P 40.75 mildly bearish, but current K contract may run up to 43.80. It is always tough to decide how much to weight pivots when they have a few trading days left. New Q2 pivot and of course April as of 4/1.
If you bought the spec buy on 2/12 as suggested then you have nice gains. You could give this a bit more room and see if we get a tag of the current contract quarterly pivot. It is also likely that oil will be above its Q2P and that could be a longer term hold level for a portion of this position.
CL1 W chart clear low of year on YS1. Decent rally but still below 1HP and YP.
CL1 D chart 1 day above Q1P which looks bullish but small blue bar may be fading back under the level today.
CL K contract.
CLK D chart with all levels. Lots of resistance above. For now above MarP led to rally to MarR2. Still under Q1P which will be chaning in about a week, then 1HP and YP above.
CLK W chart usual view with RSI to 48 last week. Still downward sloping 20MA and 50MA.
D chart with 1 day break of 10MA and recovery. 20MA nicely upward sloping and 50MA starting to slope too. But, heading into downward D200. Not much edge either side.
As everyone knows the market has been very correlated with oil this year. So let's take a detailed look.
Sum
Pivots caught the turns, with 2015 low on YS1, January low on 1HS1 and February low on YS1. On an even longer term view the CL1 contract dipped below, but did not close below the 2008 low (on a monthly basis). All this is very constructive for a possible long term low. However, the weekly RSI and daily chart retracement are both at levels that often pause a rally. The pivots in play through the rest of the month are MarR1 which should hold as support. This is 36.79 for CL1 and 37.04 for CLJ. In addition, after being above its WP for 4 straight weeks it is trading below as I type (37.87). So, below 37.87 shows short term weakness, but medium term strength above 37.04. Below 37.04 would risk a larger drop and thus increase the chance of a more significant fade for stocks back under long term pivots. Back above 37.87 would be stronger and invite a near term move to about 40.
* * *
CL1 W chart below and yes, the first low on 1HS1 near exact and the low of the year near YS1 also near exact. After plunging through support in 2014 without any attempt to bounce, there was a minor bounce on 2015 YS1 and now again decent rally from major support. But it will take a lot more to recover long term pivots. There is decent RSI divergence on the lows with RSI clearly higher and finally above 30 on the February low compared to 27 in January.
And here's the daily chart with all levels.You can see the one day break and recovery of YS1 on 2/11-12, with clear look of support after a selling volume climax. It jumped up to FebP and after some shuffle cleared on the last day (like many stock indexes). It has been entirely above the MarP and cleared R1.
Here's the current J contract, W chart.
And the D. Stronger to hold MarR1 as support.
Now on to some more typical view charts (MAs and BBs), again on the CL1 version. MA lines are 10 in blue, 20 in orange, 50 in purple and 200 in black. The first quarterly chart shows dip below 2008 lows and recovery above. Simply stated above the 2008 low of 33.20 is bullish.
Two closes on the 2008 low (ie above, not below) was the tell for the rally. RSI some divergence and quite a lot of BB divergence, but we may need another low at some point and the 20MA is still sharply falling.
Classic BB and RSI divergence on the lows along with YS1 was why I said short cover or buy on 2/12 (only such call this year!). RSI high at 50 and downward sloping W20MA are both negative considerations. Red line is the 2008 low which now lines up with the 10MA.
Daily chart nearly fully OB, 50% bounce from last October high to low.
As everyone knows oil has played a very large role in the market. The 2/11 low was on its YS1 (1 day break and recovery) and since then stock indexes have been up as well. Oil is opening above its MarP (also like most stock indexes) so this is a part of the clue for the short term - does oil rally up to its MarR1? Or fall back to MarP?
CL1 contract, weekly chart with lows bang on 1HS1 then YS1 and since then 3 weeks in a row up.
CL1 contract, medium term levels. Opening well above the new MarP at 31.49 with first resistance 36.94 at the MarR1.
CLJ6, MarP at 32.76 and MarR1 36.79.
Moving on to the J contract, the big levels in play are 1HS1 30.78 and then the YS1 29.11. If those go stocks will probably break down.
Oil is moving the market and probably decides in the near term whether stocks hold lows or rally further. Let's take a look.
This is the continuous CL1 contract with long term levels on a weekly chart. You can see the relentless drop after the 2HP and YP break in 2014, and from there is has been a long term downtrend that clearly continued in 2015 2H with the rejection of the 2HP.
But in 2016, oil has tried to hold major support area 1HS1 27.89 and YS1 26.69. Those were near the exact low areas. But if CL closes with a small blue bar above support, that increases the chance of a break in the next bar. Weak buying is just not what you want to see above major support.
Here's the daily view of the same chart. Does not get as crystal clear as that folks! You might even think I'm drawing those levels after the bounce but no, they were in play from the open on 1/4/2016!
Here are quarterly and monthly levels only, without the long term pivots. You can see rejection at the FebP and a lower high recently.
Lastly, CL was able to rally above its WP to WR1 this week (chart not shown) but quickly dropping. Basically, if below the WP next week then probably back down to the major support area to test.
CL1 could form higher low on 1HS1, or even double bottom on the YS1; but anything lower would mean next support near 24.12 and that would probably coincide with a breakdown in the market.
Volume is moving into the J contract, and the levels are: 1HS1 30.77, YS1 29.11, then Q1S2 27.33.
There is a funny story about this post. After the last one on the Dow discussing the possibility of a turn, I noticed some things on oil and started to type up this post. I wasn't quite finished when I went out with my wife for a coffee on Friday morning as is our custom. Returning less than one hour later, oil has moved up quite a lot. So this post will be Part I (before coffee) and Part II (after). If you think I am making this up, just check the charts - no rewind on data feed.
Part I
Obviously the decline in oil has been one of the big stories. I think it could be near a decent turn, but whether this is *the low* is hard to say. Maybe a bounce before lower. Still, if oil bounces then stocks will probably rally and bonds drop.
CL1 weekly on YS1 / 1HS1 combo. Except a 2015 Q2 rally, oil has been dropping since mid 2014.
Here's another view of the same exact thing with usual MAs, Bollinger bands and RSI. Note - this is the first low that is entirely inside the BB on significantly less selling volume, with RSI holding 30 this time instead of below. This is textbook Bollinger band and RSI divergence - the stage is set for a squeeze.
Part II
I return to this CL1 at 29 instead of 28 from the above post. Here is the daily CLJ chart. Nice divergence on RSI here too, just 1 day slightly below the YS1 and now above both long term levels. This is a spec buy or at least a short cover.
Check out this blog post from 1/19: "CL1 is now approaching 1HS1 at 27.89 and then the all important YS1 at 26.69. This area will likely have to hold for stock indexes to stabilize and bounce."
Where was the low? Mostly on the 1HS1 level with dip below but close above on 1/20 then up from there. On the current contract the low was pretty much bang on YS1. This low may need testing. The levels to watch are listed; both charts below. Also including USO which looks more like CL1; I think the current futures contract is giving the best signals but still the others could be worth watching.
CL1
Q1S1 30.58; best to stay above this, but only medium term level and longer term more important
1HS1 27.89;
YS1 26.69
If YS1 breaks then Q1S2 is 24.12
CLH6
1HS1 29.45
YS1 27.89
Q1S2 26.02
USO
1HS1 7.82 (not tagged yet)
YS1 7.18
Whether this is the low of the year or some bounce only to go lower remains to be seen. Recent blog posts pointed to 4 YS1s and a YS2 on NDX, COMPQ, INDU, RTY and CL. Here they are.
NDX held YS1 near exact
COMPQ broke YS1 intraday but closed above the level
INDU also broke YS1 intraday but closed above the level (barely)
RTY nearly tagged YS2 (about $6), 1HS2 also helped and had decent rally
CL (both H6 shown and CL1 not shown) held YS1 near exact
SPX / SPY / ES didn't really help as those were still looking vulnerable. NYA also was below YS1 as well. On both of these the level looked like resistance. This is why I like to check the main USA indexes as a group and decide from there.
When CL1 (continuous oil futures contract) hit 2015 YS1 I called for a short term low. And that was bang on. But in 2016 oil has gone straight down.
It opened below all pivots and January pivot was resistance right from 1/4/2016. Down to JanS1 and right throught it, down to Q1S1 and JanS2 combo, 3 days stable, then another leg down. CL1 is now approaching 1HS1 at 27.89 and then the all important YS1 at 26.69. This area will likely have to hold for stock indexes to stabilize and bounce.
On CL G6, the levels are 1HS1 at 28.03 (breaking) and then the most important YS1 26.42, along with last chance save at JanS3 25.62. I have added the current contract G6 below.
Is the oil low in? Maybe! Here's why in the video.