Continuing Friday's shot in the dark [energy market "What?"] are compelling matters crushing related equities...
By the sounds of it there probably is a decent energy long trade setting up. Returning to Friday's $WTIC chart, a positive move that technically repairs steeply descending momentum (see PPO, top panel) is circumstance fitting the decided, across-the-board negativity Cramer noticed over the weekend in all things energy.
Yet in light of the likewise decidedly negative state of $WTIC's momentum, at worst there are lower prices still ahead, and at best a basing process lasting some weeks and months could develop instead. Per the former possibility, go back exactly one year (June 2011) for a "you are here" perspective. Per the latter, refer to mid-May 2010.
Today's deployment of four U.S. minesweepers in the Persian Gulf could be paving the way for $WTIC to form a base. Likewise the Saudi card appears all the more on the table, as any war launched against Iran probably brings an Iranian response to the "kingdom." If not from Iran, then possibly Russia, as removing Saudi supply could secure the value of Russia's, which in current climes is vulnerable to marginalization at the altar of hyperinflationary breakdown. You gotta wonder, too. Did Putin talk "duck hunting" with Bibi today? In so many words tell him, "You touch Iran and the Middle East's imperial oil fiefdoms are turned into parking lots."
So about today's muted volume: it is enough to expose deer frozen in the headlights of an oncoming freight train. Relative strength (top panel) and momentum (bottom), both in balance, appear to be turning over. Of course, given their repair this month, there could be time and space to hold the market up a bit, at least relatively speaking. Assume for the time being, then, a 2nd wave of five waves down from this year's peak will continue forming, with a downward leg of this 2nd wave currently unfolding. Other technical measures likewise repaired during this month's bounce also support this outlook.
Having done a yeoman's job disguising the market's ill internals (which condition has persisted for so long healthy observers likewise are being made sick!), a "sign of the times" in transition to panic might lead to the weakest of Elliott corrective waves forming here. Thus, a so-called "running correction" is depicted above forming the 2nd wave down from this year's peak.
Index levels last seen in the summer of 2009 still appear likely over weeks ahead. Some sectors could challenge their March '09 lows, however. Approaching is Team Fraud wielding the only weapon at its disposal not likely to be resisted (i.e. a tidal wave of sell orders), made to bolster its cause in battle with Glass-Steagall...
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