CLJ9 April Light Sweet Crude Oil Daily:
This whole year we have seen the front month contract see tons of selling pressure as demand fell and supplies rose creating an abundance. As the March contract fell victim to the same scenario, we saw a squeeze towards the end and the spread between the front and back month finally narrow to under $1.00. The chart of April above shows the contract made new lows in an effort to close the spread with the front month. Now that March is out of the way, was this a false breakdown? Or a continuation of the trend, lets take a look at more...
This whole year we have seen the front month contract see tons of selling pressure as demand fell and supplies rose creating an abundance. As the March contract fell victim to the same scenario, we saw a squeeze towards the end and the spread between the front and back month finally narrow to under $1.00. The chart of April above shows the contract made new lows in an effort to close the spread with the front month. Now that March is out of the way, was this a false breakdown? Or a continuation of the trend, lets take a look at more... April/March Crude Spread:
The daily chart shows the spread between March and April crude oil narrow from a high of $8.19 on Feb 12 to $0.77 Feb 20.
Continuous Front Month Light Sweet Crude Oil Weekly:
Long term oil has very strong support here as shown in the chart below. This support has created an inverted Head and Shoulders formation with a $50.00 neckline. We shall see if crude will be able to hold this support, break out of this downtrend, and test the neckline resistance level. 
Past performance is not indicative of future results. The risk of loss in trading futures and options is substantial and such investing is not suitable for all investors. An investor could lose more than the initial investment.
Long term oil has very strong support here as shown in the chart below. This support has created an inverted Head and Shoulders formation with a $50.00 neckline. We shall see if crude will be able to hold this support, break out of this downtrend, and test the neckline resistance level. Continuous Front Month Light Sweet Crude Oil Monthly:
Monthly long term support trend line from 1999. A break under this support and crude can be subject to a retest of the lows and a continuation of the trend. For now, look at it as a complete retracement from its breakout in 2004 where old resistance has now turned into support.
Monthly long term support trend line from 1999. A break under this support and crude can be subject to a retest of the lows and a continuation of the trend. For now, look at it as a complete retracement from its breakout in 2004 where old resistance has now turned into support. Does Silver have something to show us of what oil can do from here? Lets take a look...
Continuous Front Month Silver Monthly:
Past performance is not indicative of future results. The risk of loss in trading futures and options is substantial and such investing is not suitable for all investors. An investor could lose more than the initial investment.
2 comments:
Nice post, its starting to look like the supply glut may be coming to an end with the drop in prices. One thing is certain, the market is no longer paying people to buy crude and hold it for a few months. Its incredible how quickly the April/March spread got squeezed. The contango is dead!
I recall Gartman said that he couldn't be bullish on crude until the contango had disappeared. I guess the idea is that it creates forward supply of crude and selling in the later months which prevents a rally from developing. He said he "refused to pay the contango" and would rather own COP or one of the other producers. Maybe now Gartman will go bullish on oil again.
Crude topped with a failed breakout, maybe it will bottom with a failed breakdown. That being said, it will be tough for crude to rally with the US stock market crashing. We'll see, I remain extremely bearish on stocks and cautiously bullish on energy.
And I would like to add,
KICK ASS CALL ON SILVER!
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