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?  

This week:

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)