Tuesday, August 30, 2016

Oil: We'd Only Buy A Breakout

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*Oil has forces pushing it on both sides of the fundamental fence.
*Oil should have dropped more on Saudi comments, but it held.
*There appears to be a $40 floor for now so we'd look for an upside breakout to determine the next move.

We've been bearish on oil (USOOILUWTI) since July 11th. Oil went straight down from there. We pointed out that $40 was a critical level. Since then OPEC worked to organize a meeting to freeze output. The call for a meeting alone apparently caused oil to hold $40 and bounce. $40 now acts as a fundamental support. We have some visibility for limited downside. If oil wants to go up we'll be confirmed on a breakout above $49.50.
Let's first look at the oil chart for some perspective.
Oil is starting to look more bullish than bearish. You can see it broke a downtrend. That said if it were to close above the horizontal line $49.50 we'd have confirmation of an uptrend.
$40 Floor For Now
You can see on the chart above oil bounced hard at $40. Many OPEC producers are struggling with oil now that it's down from $130 and it appears $40 rallied a call to cooperate.
Now that oil lifted, the Kingdom of Saudi Arabia ("KSA") appeared to back out. KSA told Reuters late Thursday,
"We don't believe any significant intervention in the market is necessary other than to allow the forces of supply and demand to do the work for us."
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Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS

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