The rising tensions with Syria are being seen as offering a logical reason for the rise in crude oil. But as you can see on the weekly chart for USO, the crude ETF, the technical setup was already in place for black gold to rally. With net long specs obscenely high, and the potential for an overreaction to Syria, I suppose I should be looking for a bull trap.
However, technically crude is doing everything it should be doing in a bullish manner–Failing to break lower amidst abrupt shakeouts. Note the weekly chart initial triangle breakout, followed by a recent bull flag before pushing higher yet this week.
The issue is at what point rising crude will adversely affect consumer stocks. To an extent, that may have already occurred and still be in progress. Historically, the work that i have done suggests crude pushing up through $120/barrel is the tipping point for stocks. Is it different this time?
Some energy stocks of interest: EGN SM.
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nice post, i agree these violent shakeouts have done nothing but strengthen the market in crude. i have a 115 target myself (some prior resistance)
Thanks, greg.