Be a little more patient, as it will likely be soon before the market tells us if it wants to bottom...
Oil Getting Ready to Ignite
04/01/2010 12:01 am EST
I only focus on oil a few times a year. Once was when it was going parabolic, and on CNBC, I said don't buy it and get ready to be short (it was around $140 then). It went to $147 and then dropped a quick $30. Then, this December, with Mark Haines and Erin, I said to get long for a micro move at around $38-$39.
That Was Then, This Is Now
Oil is back on my radar for a momentum move in the coming weeks. The range is getting tight, and there are lots of overseas catalysts and fundamental reasons developing. The bottom line is that, technically, it looks great for a momentum move. All the time frames are lining up. Here is the daily chart:
And here is the weekly chart:
$40.40 is my line in the sand. A daily close above there and I will be actively trading it again. A trade above the $84 area in oil and a close there should ignite another move to the $93-$98 area.
Note that this will not be good for the stock market and could lead to a May-June selloff in the market. By that time, the Dow could be in the 11,100-11,400 range and the S&P in the 1,200-1,225 area. I will look for the same setup that I saw transpire in January in that case.
By Scott Redler, trader, T3Live.com
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