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Index Wrap

Bulls and bears struggle for a footing as oil slides to $45

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It was an up, then down, then back to relatively unchanged trade as the major indices finished unchanged for a second-straight session as oil prices briefly dipped below the $45 level, which helped offset a slightly weaker-than-forecasted existing home sales report for July.

U.S. Market Watch - 08/24/04 Close

The dollar found gains again today as October Crude Oil futures (cl04v) 45.15 -1.95% slipped further from their recent contract highs of $48.37. The dollar's strength had the AMEX Gold Bugs Index ($HUI.X) 199.35 -2.68% giving back some of last week's gains, while October Gold futures (gc04v) were drilled lower by $7.20, but still hold above the psychological $400.00 level.

Oils decline continues to lend itself to bullish sentiment as the S&P Retail Index (RLX.X) 388.05 +0.60% managed to close above both its rounding flat 200-day SMA (386.76) and trending lower 50-day SMA (387.28). As of Monday evening's close, Dorsey/Wright and Associates' Retail Bullish % (BPRETA) was still reading "bear confirmed" at 42.15%, where a reversing higher reading of 46% would be needed to achieve "bear correction" status.

Treasuries were little-changed as bond traders get ready for tomorrow's 2-year auction.

October Crude Oil futures (cl04v) - 30-minute intervals

Today's trade at $45.25 had the October Crude Oil futures (cl04v) slipping below its WEEKLY S1 ($45.26), but perhaps more importantly, generating a double bottom sell signal on its $0.25 box scale point and figure chart. A near-term "oversold" bounce might have this contract bouncing back to its WEEKLY Pivot of $46.78, but much more than that and one could only consider the recent decline as some profit taking. The 30-minute interval chart allows us to quickly overlay the QCharts-derived weekly pivot analysis levels for this futures contract where I would have to go back to the week of 06/28/04-07/02/04 to find a period when this futures contract traded below its WEEKLY S1. That week, this contract traded BELOW its WEEKLY S2 of $36.29 early in the week, then rallied to trade just shy of its WEEKLY S2 ($39.09) by week's end.

It may not be a stretch at this point to associated Oil's WEEKLY Pivots with those for the major indices (INDU/SPX/OEX/NDX) in our Pivot Matrix.

Market Snapshot / Internals - 08/24/04

It certainly looked like bulls were on the ropes mid-session as advance/decline lines turned modestly negative while the weaker Semiconductor Index (SOX.X) 380.27 -2.52% challenged the recently resurgent AMEX Gold Bugs Index ($HUI.X) 199.35 -2.68% for downside leadership.

By session's end, the major pulled right back up to close at today's DAILY Pivots, where many intra-day observations I was able to make had a lot of stocks and indices hanging pegging some of their own DAILY S1s, Pivots and R2s.

Baffling was the rising TRIN above 1.00 and its DAILY Pivot, while the Market Volatility Index (VIX.X) 15.33 -3.46% fell from the opening bell.

The TRIN and VIX.X indication have me counting "2 bearish" and "1 bullish" on the session, where price action was somewhat reflective of a modestly bearish, yet split decision.

Dow Industrials (INDU) Chart - Daily Intervals

Not unlike the S&P 500 Index (SPX.X) which struggles with my old, yet primary downward trend, the narrower Dow Industrials (INDU) 10,098.63 +0.25% did battle with its trend just as the July existing home sales figures were released. The Dow looks range- bound near-term from a rather correlative curling higher 21-day SMA and WEEKLY Pivot, while bound by resistance at the intermediate-term 50-day SMA and MONTHLY Pivot.

One could say that stocks anticipated the recent pullback in oil prices, but after a rather quick 6% decline in oil prices and the closely monitored PRELIMINARY second-quarter GDP figures due out Friday, traders seem little eager to make any meaningful bets, where volumes at both the NYSE and NASDAQ were relatively light.

Pivot Analysis Matrix -

The Semiconductor Index (SOX.X) 380.27 -2.51% found some elastic- type of snap near the close, but is the first equity-based index in our Pivot Matrix to see a trade a lower trade at its WEEKLY Pivot of 379.00. While 2-points difference, I've marked correlative support at SOX.X DAILY S1 and MONTHLY S1, which would be the only levels of support between current trade and the recent August 13 52-week low of 360.61. A quick check of Dorsey/Wright and Associates' Semiconductor Bullish % (BPSEM) has their bullish % still reading "bear confirmed" at 11.04% as of Monday evening, and it would take a reversing higher reading of 12% to reverse up to "bull alert" status. Very weak, yet very oversold internals here.

I've marked tomorrow DAILY S1 for the SPX.X as I see that level is very correlative with the SPX chart shown in last night's wrap, where the MONTHLY 61.8% retracement (1,092.47) is rather correlative, and where buyers lurked just above in today's trade.

Jeff Bailey

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