This is one of those charts that has the whole world in its hands. A break below the lower trend line implies sub $30 oil, and that sounds a lot like zero interest rates and a global recession or depression. As it often the case Wall St economists cheer this initially, low prices in energy mean higher profits, right? There is a lot in here to worry anyone. The build in volume I am not sure what it means. There is often the hidden message that inflation is waiting around the turn, but after what carnage has been done? I don’t have the COT report but I suspect too many people are long energy. Auto sales are leveling off, I would normally associate this kind of chart with a bottom, and that possibility remains. Chart wise the failure to test is problematic and as a trade this pullback to the bottom line of the most recent flag is interesting. The bottom line holds we get through the recession and WTIC forms a breakout, we can all celebrate. Right now too many investors are holding on to something that might soon turn against them, and when those A’s in the AD line turn to D’s the price will overshoot to the downside.
Duck and Cover 