Sell Oil Still?
4/30/2014 5:30:24 AM
Good morning Traders,
As every day unfolds, we have new data to analyze. In today's Daily Stock Barometer, here's what we are seeing and how we interpret it:
Periodically we'll see a trend developing behind the scenes that will have a big impact on prices. This is huge because increased fear equates to fuel to rally. So even if we do get a post fed meeting sell off, it will be short lived. Our next key reversal date is 5/6.
Since it is Wednesday, we look at our measure of the II data. A simple rate of change view suggests in the short term that the potential if for this to turn higher with the markets.
One concerning thing developing is the relationship between the QQQ and SPY. A turn lower here for the Qs would be very bearish. The potential exists.
Another interesting divergence, which is a bullish one, with our barometer showing increasingly bearish energy developing as prices hold up.
Putting this all together, we remain in Buy Mode and expect the markets to rally for at least 1-2 weeks. That being said, there is the potential for a bearish reaction to the Fed's statement today, and if we do see selling, it could be sharp - but I would only expect a week or two of selling and then a resumption of the upward move - given that the market has already done the work of correcting without it being reflected in price action.
We remain in OIL PUTS in our Oil Options Trader service. For those who have access to our IRG MARKET TIMING RESEARCH, below are our oil charts that we use to make our determination. We're starting to see some mixed signals with the dollar, and that can play out in the OIL market - so we'll have an update soon.
I also have several new charts which take our indicators and show expected returns. We will be adding them soon.