Analysis of Stocks, Markets & Commodities

My oil outlook was a failure, oil cracks $100 and gaps down the day after! The global slowdown is taking its effect on oil but when everyone was going that way, they under estimated the Dollars weakness as I have mentioned on my September 14 entry. Sure enough Gold sky rocketted but oil did not follow. Now oil is following its friends and is heading higher as it is now above $100 again at $102.75.

Oil tests $100. A bounce if very eminent as the Dollar weakens and as other commodities bounced substantially already. (See chart below on comOILdity sell of entry)

Oil's strong primary uptrend line is now broken (see August 7 chart). Next, the consolidation range of $112 - $122 it created in the month of August is also now broken (see August 30 chart) sending it below $110. I think oil will now consolidate again within the price range of $100 - $110. The bulls will surely fight the $100 support from here on. We need to see prices to go down at these levels more often before expecting it to be broken. Oil is also now down 28% from the high, a good bounce near the $100 mark is really likely but will be short lived because of global economic slowdown resulting to weaker consumption.

Unlike favorite oil, Gold (our next best friend) is still hugging the $800 mark. Unless we don't see a break below the $775, Gold may still go up from here. If it breaks, we may see $700 for gold.

Unlike oil again, Gold's uptrend line is still intact. Gold is now down around 22% from the high.

Oil continues to move within the range of $112 - $122 in which both prices our tough supports and tough resistances. Hurricane Gustav will now be the key driver whether it will break above $122 or break bellow $110. 

What a crazy crazy week for oil! Just when you thought that the downtrend line broke and that oil is ready to move upwards again after a $6 plus dollar move to the upside, it fell back down more than how much it made the day before! Oil chart created a bearish engulfing pattern a white candlestick is followed by a larger black candlestick that eclipeses the white one. But is this valid? Usually this kind of formation happens when there is a strong uptrend just like what happen to oil last July. This time it's different, we are in a downtrend. Nontheless, it still showed a bearish pattern and oil may try to visit its support again but then again, we'll see what will happen to it because this one was been moving wildly these days.

Will oil be able to stay above $110 as it had been the past week? It can be clearly seen that oil has been bouncing from current level but will it still hold true for this coming week or will it bounce substantially from here since it is quite oversold now? Time will tell.

Oil found some support at current levels and is now trading $116+. Demand is still projected to become weaker which will be bearish for oil in the short term.

Oil indeed fell and is now $115 / barrel. Remember, the closer it gets to $110, the more buying support will be seen.

Crude oil pierced but manages to bounce from its 130ma support of $118 and closed above it. We may see a lower high again before it resumes to move lower and closer to its primary trend. Oil is still in a primary upward trend but for the short term, it is already in a downtrend (see chart above). Which way will it go? I hope down south but until we don't convincingly see a break of the primary uptrend which is a break below $110, we should not discount that it will further go down. I think that $110 is a crucial number for oil since it was a previous high and then acted as a support when it corrected from $120 (see chart below). Next will be $100 for the same reason but it happened a lot more times in $100 making that price more crucial.

After making a lower high, oil falls some more!!! It is now trading around $120, it went as low as $119 something. This will be good news for our local market, many will now agree that inflation has made its peak. Next support is the 130ma which is around $118. A break below this level will send prices to $110. Problem is, where are the roll backs?! Are we not getting them because these oil retailers bought oil at high prices?! Oh please!

Oil rebounded to $125 up by almost $2 on what? On comments by Iran's president that there wa a significant increase in the country's nuclear program. This may support oil's price for the short term even as demand goes down because when there is some geopolitical concerns in the middle east, there will always be concerns on the supply of oil that is being produced there. Middle East is one if not "the" supplier of oil to the entire globe.

Oil is now at 7-week low and may be near support and we might see some buying interest already. It is $123 or so. Next support is at previous low of $121.61, I believe that the bulls will try to support oil at this price or anywhere near it and will correct a little upward before resuming its downtrend approaching the major trend line.

Oil Daily Chart

It is very clear that oil's short term trend has been broken and is now facing a corrective phase. Note that it tried to break this trend line a lot of times already and finally... FINALLY! It did! We may now see a temporary relief in high oil prices and may expect the price to just consolidate and move sideways within a small range. But wait, we have to look at the bigger picture so that we can check if this trend is correct or if we have seen oil topping at $147.

Oil Weekly Chart