The Barrel Has a Leak
After scraping the $100 mark a couple of times last week, Oil has since been running scared from the bulls. Today the February Crude contract (CLG8) closed almost 2.5% to the downside, and traders who put in buy stop orders at the 100 mark are feeling the pain. At this point, we can see that is not where buyers came in to flood the market.
On the chart, prices dipped briefly below the 15-day moving average today, before rallying slightly to close above that price by day’s end. The 25-day moving average is also still well below the current price and stochastics are finally starting to decrease. Although stochastics never hit the 80 mark (overbought indicator), the $100 mark has acted as strong resistance since last week. As a result, Oil finds itself at a very interesting crossroads right now. If this is just a pullback from the higher trend, then the area around 94 acts as slight support before support gets stronger around 90. Meanwhile, bears have the big 100 mark as resistance based on the last few days.
Tomorrow, we look forward to pending home sales and consumer credit numbers.
Mike Tosaw, Director of Education
