Oil, like all other commodities, flopped big time today. Worst sectors were energy and agriculture...USO took a huge hit intraday with no reason behind it sending USO to its lowest close in months and breaking support. Another day south of the last support and i am officially taking USO off my long watch list:
XLF fairly sideways. Didn't lead the drop down nor lead the rise up...just a boring sector to watch as it continues to be in a neutral position:
Oil still has a chance for recovery because UUP is still lacking strength, as it desperately tries to break resistance. Reason for disagreeing with analysts who want to short commodities is this very chart. Without a break above resistance, commodities will not go much lower: Its a wait and see scenario in the dollar:
Analysis: There are technical signals pointing to a bullish rally...yet many more pointing to a continuation of the bearish trend. Best reasons to believe that SPX will rally is the weakness in oil, lack of weakness in the dollar, and the superlow volume on down days. These are great but not enough to get me bullish. Overall we still have a weak overbought market that should have a pullback down before it can stand a chance to break resistance on the upside. I still feel that commodities still have some strength and today might be marking a short term low in those sectors as i feel that selling was way overdone in that sector as the dollar didn't quite gain enough to justify the move down in dollar related stocks. I remain overall bearish neutral until USO has another confirmed close below today's low and the dollar breaks resistance. What i need to see to feel much more bearish is for more weakness in SPX's oscillators and legitimate strength in oil.
Game Plan: Despite saying i would sell off my short position last week, the weakness in the market and a lack of focus to the markets has caused me to still be a holder. Earnings come out the day after tomorrow so i will need to get rid of the position or atleast downsize the position. Depending on the move in the market tomorrow, i might switch over to a small short position of the market or one of the stocks listed below. I am hesitant to list a few of them as i am overall very cautious and skeptical about the fall in commodities. But technically, these following stocks are the best buying opportunities that i spotted on my list...i definitely am having a hard time picking things to buy at this time. I will be looking into new sectors to keep a tighter watch on as well as some weak financials that should continue falling despite the overall strength in XLF.
Conviction Buy List:
SHLD (inverted head and shoulders with surprisingly strong relative strength today)
[USO]
Conviction Sell List:
Market (MDY)
Some Transportation (drys, osg, fro, [unp])
Some Energy (anr, btu, wlt,)
Exchanges (nmx, ice)
STV
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