Today’s indecisive trading so far does not show any indications that there has been a change of investor sentiment in the markets. Crude oil is showing some bottoming action and gold prices are stabilizing, indicating the lack of concerns. Continue to stay predominately long with the assumption the uptrend in the markets will remain an uptrend until the appearance of a reversal signal and a close below the T-line.
The pullback in Oil continues. $37.09 is still an important support level, with a double bottom forming at ~$37.90 on the 60-minute chart. Bullish divergence is present and the high probability is a resumption of the uptrend soon.
WLL, USO and TOO still look like good trades. It might be prudent to wait for Oil to turn back up before getting into these now. The specific entry, stop and target levels are reviewed on live charts in thevideo.
Today’s strength in the markets is confirming the J-hook pattern that had formed in the Dow yesterday, using a left/right combo off the T-line. The implied trend for the Dow was to move back up to the top of the trend channel. The most compelling market strength indicator was the NASDAQ gapping up through the 200 day moving average today. The T-line is still acting as a strong trend support with the uptrend in trading channel acting as the major trend indicator. Stay predominately long, numerous short positions would have been stopped out on today’s positive trading on the open.
The markets continue to trade in an indecisive manner, just like it did prior to the three day weekend. However, note that the T-line continues to act as a relevant factor. The indexes remain barely above the T-line. Gold and crude oil also remain in an indecisive slow drifting lower mode. Remain predominately long but be prepared to close positions on any signs of selling strength.
Sure, prices have pulled back for a few days, but that is how price moves in an uptrend, Higher-Highs and Higher-Lows. The high probability is that Oil will quickly reverse back up, before getting down to the support level of $37.09, and continue the uptrend.
WLL still looks like a really good trade. Of course, it pulled back with Oil and that just means a better entry price at this time. Stop is still at $3.33 and will be trailed up when/if a new high is put in.
USO, same story as WLL, pulled back to a better entry. Stop still at $8.10, which I will trail up when/if anew high is put in.
Still really like TOO, but entry is not triggered yet. Waiting for a new high of $6.79 and then will take along position with initial stop at $2.62. If price blows through the entry, then I will trail stop up to about$4.95.
Today is Friday, Good Friday, and a good day to pause and update the week’s price action. I look forward to next week and will give an update on Tuesday.
The Dow is currently trading right on the T-line but the NASDAQ and the S&P 500 is trading below the T-line. The magnitude of the selling is not rampant but the charts have illustrated over the past few days that consolidation/profit-taking was in place. The T-line acts as a very good indicator to close out positions when an uptrend in stock close below the T-line. It can always be bought back when it trades back up above the T-line. Look for continued profit-taking, especially going into a three-day weekend.
No more evidence needed. Oil is headed up!
We had a couple of levels for Oil to go through to confirm the corrective wave up. First was $37.09, and then if there were skeptics, we said $39.03 should put all doubts to rest. We are at $41.01 as of this writing and no doubt remains – the recovery is on.
The targets for Oil remain $62.97-84.87 on the Crude Oil futures contract. Of course, that will take sometime and there will be rallies and pullbacks (Higher Highs and Higher Lows in Dow parlance) along the way. But the evidence is in and the high probability is that it is happening.
I called out a few trades that were good candidates to trade this recovery/corrective wave. WLL had an entry price of $8.57, initial stop of $3.33 and a target of $17.25. The entry was hit and I am in this trade. If new highs are put in, then I will trail the stop up to previous lows. USO had an entry price of $10.33,which was also hit. The stop is $8.10 and I will trail that up as well as new highs are put in.
A new trade idea for this update is TOO (Teekay Offshore Partners.) The fundamental people would cringe at this, but we are technical traders and the Technicals are great! We don’t care why it is going up, just that it is. It could be just a short covering rally and that is fine. The initial entry is just above previous resistance at $6.79, initial stop at $2.62 and a target of $16.09. If new highs are put in, then I will trail the stop up to previous lows. The reward/risk ratio on this is awesome and makes this trade worth taking a look at.
This promises to continue to be exciting (and profitable!) and I will continue to provide updates.
The events in Europe has not deterred the slow uptrend in the US stock market. The profit-taking appears to be occurring in the early part of the day followed by slow buying. Continue to stay predominately long with the expectation of some profit-taking very soon. Crude oil prices are maintaining their uptrend and gold prices picked up strength due to the Belgium situation.
The market indexes have not yet shown any change of investor sentiment. Early morning selling, followed by afternoon buying has been the nature of this current uptrend. A trend remains more solid when profit-taking is occurring along the way, eliminating the exuberant buying followed by rapid selling. Continue to stay predominately long. Crude oil prices remain in a slow steady uptrend, the May contract trading close to the $41 a barrel level. Gold prices are in a sideways trading mode but still near the high-end of the recent trading.
In the first Oil post, I said “if Oil futures go up through $37.09, the recovery is on.” In the second post, I said “Oil recovery is a go!” after it went through that level. And, I said pullback would be normal before going on to make new highs.
It is playing out in textbook fashion! If the latest high of $39.03 gets taken out, then that just makes the case for a corrective wave stronger and stronger.
Also in the last post, we looked at WLL (Whiting Petro) as a good stock to play Oil with. $8.57 was the trigger level to get in at. That triggered and this trade still really looks good. Entries are still possible. Initial stop is at $3.33 and the target price is $17.25. USO (Oil ETF) was another potential trade. Entry is good right now. Waiting for another high to be put in at $10.33 is a conservative way to play USO. Initial stop is at $8.10 and target is $16.00.
The profit potential on the Oil recovery and these picks are really, really good and it is going to be fun to update them. I’m looking forward to it and will provide a few updates per week.