Trade Plan for 2/5 - 2/9
The oil trade and bad market breadth. Does indices halitosis matter?
Last week I was most confident that $CL/crude oil futures would likely continue its breakout progress, as the consolidation had been a long one. Typically a similar consolidation would have more follow through but it was not to be. Oil did a full scale backtest to the 73.92 level I gave you last week and while it bounced nicely there, it closed the week under. Here’s how it performed at the level given:
You can see that it bounced from the weekly 200MA just before the end of the week, but closed near the lows on a bearish engulfing candle. So is it now a bearish fakey breaky?
I outline how the discrepancy between tech strength and small cap weakness could affect the market moving forward (should it continue) and give the levels I will use to navigate on a level to level basis.
I share the precious metals breakout/breakdown levels as I believe they are still in consolidation mode.
I define what crude oil bulls need to see in the short term to keep the dream alive and give bearish targets on the downside in the event of a flush.
Summary of Market Action Last Week:
The indices rocketed up last Monday, only to decline through Wednesday. $ES/SPX futures and $NQ/Nasdaq futures blasted off again on Thursday into Friday to make new highs. $RTY/small caps futures could not hold momentum into Friday and declined to close the week red.
$GC/gold futures and $SI/Silver futures chopped constructively into Friday morning, but declined dramatically on data and bounced unexcitedly. Still, Gold closed the week with a slight gain, while Silver and $GDX/gold miners closed essentially flat.
$CL/Crude Oil futures gapped up on Sunday’s open, but declined appreciably to give back all of the previous week’s gain plus. $XOP/oil equities also declined on the week, but held strength relative to the commodity.
Here’s how last week closed out:
For the week ahead (02/05-02/09/24)