At midday, oil is gushing downward – off 3% and change. This comes as results of OPEC members’ willingness (or inability) to sustain production cuts designed to limit supply and therefore raise prices. The US standard West Texas Intermediate (WTI) futures’ are down 20% since February and are now at $42.83 for short term expectations. US production continues to flow; drillers are very active looking for new production but not completing their drilling projects. That’s a way to lie-in-wait looking for price rebounds. Currently, in the US there are nearly six thousand partial wells drilled and about ready to come online. They will spurt when prices do (causing downward price pressure once more).
Meanwhile, much ado about no-so-much yesterday with the bounce in tech stocks. NASDAQ Composite jumped 87 points yesterday, but seven days ago it fell 113. It was the major index of our top three that did not reach a new record high yesterday. It is still more than two percent from its high on June 9. Often the Composite is seen as a leading trend setter.
Sector relative strength leaders this past week included Bio Tech (FBT), Germany (EWG), France (EZU), Eurozone (EZU), and China/India (FNI). There’s an obvious international trend visible there.
Weaker ones saw Oil & Gas Services (XES), Natural Gas (FCG), Oil (DBO), Brazil (EWZ), and Coal (KOL). Again, not hard to see the trend: the trend is your friend ‘til in bends or it ends!
The Technical Tea Leaves are reading some weakness in the near future. Of course, we can’t be certain they are aligning themselves correctly in the bottom of the cup. We shall see: “Intraday high prices of the market have increased to a 21 day high. Never the less, the advance/decline oscillator is negative. This unusual event is read as a very strong bearish signal that is often followed by a downward price movement.
“The new high/new low indicator has reversed to the downside. This is a reliable bearish signal that is often followed by a downward price movement. In this up-trending market, a trend reversal could occur in the near future.”