I believe US Oil and SPY will eventually fail at resistance.
Notes:
SPY and Oil are at or near resistance levels now. Their alternative safety investment counterparts, TLT and GLD are also at or near resistance levels now.
Note all have a wedge formations on the 4hr charts anc are at a 'cross-roads' juncture.
Note the strong correlations: SPY to Oil, TLT to GLD.
Things have come to a head and one catalyst is all it will take. The two most probable in the short term are oil and earnings calls:
Catalyst 1 - If an 'oil glut story' hits the news, down go oil prices/energy stocks and SPY with it.
I believe oil is in a transient state now where supply and demand will be in a flux over the next 3-4 months. Current supply overruns are prevailing while supply cuts are still in the making. The shale oil industry is now on the ledge of profitability with an WTI barrel price hovering around $51-52. From what I've read, $45-$50/barrel will be a critical range for that sector. In short, oil is an immediate critical trip wire that the market is sitting on. An oil shortage story could send SPY further along its current 'bullish mirage' path. It's not hard to image that occurring with sanctions still in place and strife in parts of the world. Yet, if an oil surplus story hits the news, down go oil prices/energy stocks and SPY with it. In the fall of 2018, we had scenarios where one week you have a 'glut of oil' and the very next week, you have a shortage.
Catalyst 2 - Tough YoY earnings calls with forward guidance in a down turned global market will trip the market. Third quarter earnings were exceptional for most companies in the SP500 but the forward guidance was the focus of most earnings calls back in the Fall of 2018. Excellent earnings were no safe haven as a companies' stock price could fall on 'less than fabulous' forward guidance. Expect more of the same for 4th Qtr earnings coming soon. Enough calls with 'less than fabulous' forward guidance will get the avalanche going.
In the short term(by end of January):
If oil does fail(for whatever reason) in the coming weeks, SPY and the market in general, will continue its downturn as well. As a result, I believe GLD(Gold), GDX(Gold Miners) and TLT(Long Treasuries) as well as short term treasury based ETF/Funds will ALL rise together initially. This will be a real flight to safety as more disillusioned investors recognize the bear market is here. TLT is tricky though. I believe TLT will once again, push above resistance, then turn back down as cash, gold and short term treasuries prevail as preferred safety havens.
Disclaimer - These are simply my opinions based on information I've read in the news and seen here on TradingView.com. I don't have a crystal ball ...yet ....but in the mean time I'm privileged to have access to the many experts IMHO here on this site. Thank You!
Notes:
SPY and Oil are at or near resistance levels now. Their alternative safety investment counterparts, TLT and GLD are also at or near resistance levels now.
Note all have a wedge formations on the 4hr charts anc are at a 'cross-roads' juncture.
Note the strong correlations: SPY to Oil, TLT to GLD.
Things have come to a head and one catalyst is all it will take. The two most probable in the short term are oil and earnings calls:
Catalyst 1 - If an 'oil glut story' hits the news, down go oil prices/energy stocks and SPY with it.
I believe oil is in a transient state now where supply and demand will be in a flux over the next 3-4 months. Current supply overruns are prevailing while supply cuts are still in the making. The shale oil industry is now on the ledge of profitability with an WTI barrel price hovering around $51-52. From what I've read, $45-$50/barrel will be a critical range for that sector. In short, oil is an immediate critical trip wire that the market is sitting on. An oil shortage story could send SPY further along its current 'bullish mirage' path. It's not hard to image that occurring with sanctions still in place and strife in parts of the world. Yet, if an oil surplus story hits the news, down go oil prices/energy stocks and SPY with it. In the fall of 2018, we had scenarios where one week you have a 'glut of oil' and the very next week, you have a shortage.
Catalyst 2 - Tough YoY earnings calls with forward guidance in a down turned global market will trip the market. Third quarter earnings were exceptional for most companies in the SP500 but the forward guidance was the focus of most earnings calls back in the Fall of 2018. Excellent earnings were no safe haven as a companies' stock price could fall on 'less than fabulous' forward guidance. Expect more of the same for 4th Qtr earnings coming soon. Enough calls with 'less than fabulous' forward guidance will get the avalanche going.
In the short term(by end of January):
If oil does fail(for whatever reason) in the coming weeks, SPY and the market in general, will continue its downturn as well. As a result, I believe GLD(Gold), GDX(Gold Miners) and TLT(Long Treasuries) as well as short term treasury based ETF/Funds will ALL rise together initially. This will be a real flight to safety as more disillusioned investors recognize the bear market is here. TLT is tricky though. I believe TLT will once again, push above resistance, then turn back down as cash, gold and short term treasuries prevail as preferred safety havens.
Disclaimer - These are simply my opinions based on information I've read in the news and seen here on TradingView.com. I don't have a crystal ball ...yet ....but in the mean time I'm privileged to have access to the many experts IMHO here on this site. Thank You!