I was looking for oil to rally as we headed into Thanksgiving week. And, while the price did bump up a bit, oil couldn’t hold its gains. The price rolled over and slid to new lows for the year.<\/p>\n
I was wrong on that trade. But, after yesterday’s action, it’s possible that maybe I was just early – by about a month.<\/p>\n
Look at this updated chart of West Texas Intermediate Crude Oil (WTIC)…<\/p>\n
![\"\"](\"https:\/\/jc-stable.s3.amazonaws.com\/ee-assets\/channels\/articles\/mm\/201812-mm\/20181214-MM-01.png\")
<\/p>\n
When we looked at this chart last month, I noted that WTIC was stretched historically far below its 50-day moving average (MA)<\/a> (the squiggly blue line on the chart). And it was sitting on the support line from last December’s low. So, it seemed to me that we had a pretty good setup for an oversold bounce.<\/p>\n What I failed to notice at the time was that the 9-day exponential moving average (EMA)<\/a> (the squiggly red line on the chart) had been strong resistance on every bounce attempt since oil started falling in early October.<\/p>\n You can see on the chart that the 9-day EMA has turned back every bounce attempt in WTIC over the past two months. So, oil needs to close above its 9-day EMA in order to kick off at least a short-term rally.<\/p>\n That happened yesterday. WTIC closed at $52.58 per barrel. The 9-day EMA is at $51.92. So, we’re over it – by a hair.<\/p>\n But, that hair should do the trick.<\/p>\n There are several other potentially bullish developments on the WTIC chart. First off, notice how deeply oversold the MACD<\/a> and RSI<\/a> momentum indicators got on the recent decline. They’re more oversold now than at any time over the past year. And, while I don’t show it on this chart, these indicators are more oversold than at any time in the past four years.<\/p>\n Also notice how the recent pullback in price over the past week has formed a higher low on the chart. And yesterday’s action popped the price of oil back above its 9-day EMA.<\/p>\n These are all potentially bullish developments.<\/p>\n Of course, it’s tough to buy into an asset that has declined so precipitously over the past two months. It’s that old warning about not trying to catch a falling knife.<\/p>\n At this point, though, buying oil right here looks more to me like trying to catch a falling butter knife. I just don’t see a lot more downside here. And if oil starts to rally, there’s a lot of room for it to run before it hits the resistance of its 50-day moving average.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n In today’s mailbag, a Delta Report<\/em> subscriber comments on the service…<\/p>\n Jeff, just want to say thank you again for providing this service. I continue to be amazed at your uncanny ability to “feel out” the market. Happy holidays, my friend!<\/p>\n – Tanner<\/strong><\/p>\n<\/blockquote>\n And another subscriber thanks Jeff for his Delta Report<\/em> updates…<\/p>\n Thank you for your perseverance. I suspect you are under constant pressure from customers for new recommendations. I am similarly interested. But I would MUCH prefer to have recommendations with a higher likelihood of success. Take your time until you feel pretty strongly. Thank you for your help.<\/p>\n![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
<\/p>\nReader Mailbag<\/strong><\/h2>\n
\n
\n