After today’s move up CL_F should find resistance in the 65.89 to 66 area (the bottom of the cloud and horizontal resistance). So long as this area holds, we still view the move today as consolidation off of oversold levels and a back test of the broken bear flag with a continuation to a target of $62 area. The measured move of the larger Rising Wedge from the $72 levels. 

Since we identified the Rising Wedge pattern the WTI futures have gone from the mid $72 area to a close of 65.71 Friday. Currently, CL is sitting on a trend support line in the area of major horizontal support with the 100day a stone’s throw away.

Our measured move of the pattern break is the 62-62.60 area but given the extent of the move and the converging supports a pause and retest of trend resistance is warranted and or as well as horizontal resistance levels indicated. 

 

The rising wedge we mentioned last weekend broke and like this pattern type the break is quick and big. Looking at the weekly we have a clear rising channel so a test of support at some point is not out of the question.

The measured move of the rising wedge pattern puts CL_F at $62 for that trade. Looking at the daily, CL_F ended right on the 50day and shorter time frames are more than oversold. The 60min time frame has a RSI of 7! So some relief consolidation is in order. CL is now in the box from 69.50-66.5 that it bounced around in so we could see the same type of choppy consolidation between before a push below 66.50 to the eventual trade target of $62. 

That would put CL somewhere midrange of the channel so an evaluation will need to be done there to determine if a further slide to channel support is likely or a bounce back up to the top of the range. 

I believe CL is in the process of topping. There is no confirmation as of yet though but here is why I believe so. Today we have a spinning top daily candle today with bearish RSI divergence at the moment. Looking at the Ichimoku study the tenkan and kijun have flattened out and will pull price towards.

Looking at the 4hr we can more clearly see the RSI divergence and decreasing momentum as well as a rising wedge pattern – my favorite pattern.

Given the extreme Net Long positioning in WTI Crude at the moment, this adds to the extreme unwinding rising wedges typically see already as longs scramble to cover their positions further fueling the move down. 

Now the measured move of a rising wedge is just about 100% putting a target on a break down to $62. Could we grind higher? Sure but given the move in crude YTD and a lot of geopolitical risk already priced in, the risk to reward trade as I see it currently is the short side. If you want confirmation you can wait for a break of trend support to take a position and or add to it on a back test of said trend line if it happens. 

Crude is a highly manipulated commodity and nothing is for certain so use stop losses and be willing to accept the pattern is null if price and indicators are telling you so. In other words, you don’t ever want to marry oil, just date it. 

Earnings Season…it’s the most wonderful time of the year. 

Well shit.  FB, AMZN, NFLX, GOOGL.  All have reported along with others and with AMZN beating the shit out of estimates, we got rotation coming back into tech.  As I’ve mentioned earlier, commodities were leading a rally…that never works.  Today we saw buying.  It was so fucking boring today…it’s just the way I like it. Why? Because I was long from last night (with the exception of FB). I don’t play earnings, because that’s gambling.  I don’t like to gamble.  The odds are never with you.  The house always fucks you.  I lighten up before earnings.  I lightened up a lot on FB and gambled a few.  I lost.  

 It doesn’t happen often, and when I do lose, I like to keep those small. 

The only other stock I held through earnings was AMD.  I lightened up, as usual and I bought back more this morning.  

We’re still above support on the monthly level.  My price target is ~$20. 

Earnings are here and we’re in the meat of it all.  Today’s rally was led by tech and we should keep the momentum going into tomorrow after Amazon’s stellar report.  Up 10% in one day is just a damn sexy sight to see.  

So how boring was today?  So fucking boring we were arguing where the market was going and if we’re biased.  There is some concern as to where the market is going and I see where that concern can come from.  We’re about to converge on trendlines on the daily.  The two purple lines…they’re inching closer and closer and then the market breaks one of those, that is where we’re going to go.  

That is the case to be in cash.  

The case to be bullish, like me is to count ’em.  1. 2. 3.  Three times we hit a bottom (200 day moving average) and 3 times we came back up.  We hit that shit a 4th time, and bye bye. 

 

Market if we hit the 200 dma a 4th time. 

We are making lower lows, but we’re at the point now where we have to make a higher high and hold it.  We made a higher high before but the market got smoked.  Today is 26-Apr and the Fed meets 1-2 May.  We have 3 more trading days left and we’ll see if we can break out of a trendline before then.  Even though, I’m bullish, I have so much room I can easily exit and switch short to go where the market does.  I’m bullish, but I don’t mind admitting I’m wrong and switching sides to the short side.  For now, just keep buying the dip and selling the rip. 

In the meantime, I’m extra bullish on crude oil.  I want to see $75.  We’re at $68.  It’s a failure of a trade if it goes down to $64. 

-RM