Target, Met?
The XOP chart, shows today’s price action super-imposed on yesterday’s chart.
Did XOP meet the target well enough for a test? (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
XOP Wipeout
Oil & Gas Exploration sector XOP, collapsed by – 14.72%, this past week.
Prior to that melt-down, two scenarios were presented for the sector.
One, was a commodity style blow-off move, and the other, an immediate reversal.
The potential chosen, was dictated by the tape itself in this post, and shown on the chart.
Oil & Gas Exploration XOP, Weekly
The ‘measured move’ target from the wedge breakdown is shown. What’s not known is if, and when, price action will get there (not advice, not a recommendation).
Note: We’ve already had the ‘fast’ move.
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The Danger Point®, trade mark: No. 6,505,279
Down From The Highs
Continuing with the theme of Oil & Gas producers (XOP) at the extreme and potentially backing off, we have Occidental Petroleum OXY (not advice, not a recommendation).
OXY is posting the usual suspects of up-thrust (past resistance), then a return below and test.
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What About ‘Higher’?
Wyckoff said a century ago:
‘The tape is the master, and the tape, is a tyrant’.
We have to go with what it’s telling us.
Looking at XOP, it’s possible we’re in a wedge ‘throw-over’ reversal (not advice, not a recommendation).
Watching for a new daily low … otherwise we’re (potentially) back to higher levels.
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The Danger Point®, trade mark: No. 6,505,279
The Final Kibosh
Exxon, may be in the process of a commodity style ‘blow off’ move.
What the chart appears to be telling us, oil (and gasoline) prices are going higher, much higher (not advice, not a recommendation).
That’s at least before they go lower, in a (potential) demand destruction, depression level event.
Exxon XOM, Weekly
If XOM, follows its current trajectory, measured move levels would be reached right about the end of this year (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Confirmation of Price Action
The Wyckoff technique (in its purest sense) focuses exclusively on price action and volume.
Wyckoff himself said, ‘if you can’t ignore the (financial) news, you’ll never be successful in the markets.‘
With that, we have this just days ago, concerning the oil market, based on price action itself:
“Continued hostilities in the Middle East, along with oil tankers being sunk, do not seem to be materially affecting the (already high) price of oil.”
ZeroHedge Reports
Now, this just out from ZeroHedge, link here.
‘The Straight of Hormuz, has lost it’s grip on oil prices.’
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The Danger Point®, trade mark: No. 6,505,279
The Sector Has Reversed
We’ve all heard it before.
High oil prices tend to precipitate out recessions, or maybe a depression in our case (not advice, not a recommendation).
When looking at XOP, a proxy for the Oil & Gas sector, it appears to be front-running a decline in oil prices.
Or, possibly a decline in demand.
There’s also a familiar repeating pattern.
Oil & Gas Exploration XOP, Weekly
Once nuance to note:
Continued hostilities in the Middle East, along with oil tankers being sunk, do not seem to be materially affecting the (already high) price of oil.
Stay Tuned
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The Danger Point®, trade mark: No. 6,505,279
Demand Collapse?
Across the pond, the U.K. seems ready to introduce Universal Basic Income; welcome to Neo Feudalism.
Meanwhile, back at the ranch in Germany, we have Survival Lilly giving us updates near daily, on that pending implosion.
‘You will own nothing‘, time Stamp 6:20
With all of that said, including the military hijinks in the straight, you would think uncertainty results in oil prices ever higher.
At this point, it’s not happening.
Oil & Gas Exploration ETF, XOP, Weekly
Oil & Gas Sector XOP, has been declining for three straight weeks (not advice not a recommendation).
There’s the familiar pattern: Spring-to-Up-Thrust
Like previous posts, we need to be reminded (at least I do), of the massive scale of events.
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The Danger Point®, trade mark: No. 6,505,279
Hundred-Year Extremes
Going all the way back, this link, shows we’ve gone beyond 1929 levels.
It seems, nearly every recession (depression) gets kicked off with a spike in oil prices.
In 2008, USO peaked during the week of July 11, that year.
However, the damage was done.
The S&P (SPY) was already in decline, having peaked the week of October 12th, a year earlier.
Another Extreme
Not to be outdone with the valuation extreme, we have the mutual fund cash extreme at this link.
Mutual fund managers are ‘all-in’, Time Stamp 4:15 (not advice, not a recommendation).
Then, there’s ‘private credit’, link here.
Now, on to the trade du jour.
Corning GLW, Weekly
As GLW, was breaking out from generational highs, three attempts were made to short; result, small losses.
Adjusting Behavior
The most important take-away, is the behavior change as a result of losing entries; that is, stand-aside.
As said many times on this site:
“There’s nothing wrong with being wrong. It’s being wrong and staying wrong that’s the problem”
Once the Fibonacci sequence was identified, link here, short positioning continued.
Next Steps
Anything can happen.
For the chart above, the stop on the -06, trade is last Friday’s high (not advice, not a recommendation).
With that high as minor resistance, there’s also the weekly high at 139.63, for additional ‘protection’.
Stay Tuned
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The Danger Point®, trade mark: No. 6,505,279
Gold, Silver & Oil
As of 7:12 p.m., EST, gold futures GCQ25 are steady-to-up, about +0.42%.
Silver futures SIN25, are flat +0.08%, so neither metal is moving decisively.
Oil is a different story.
Futures CLN25, had a gap-higher open, printing just below last Friday’s high of 77.62.
In just the hour so from the open, that contract is now retracing lower, nearing Friday’s close.
That means, when looking at the chart of USO below, current price action is within the upper range of Friday’s trading.
United States Oil Fund, USO, Daily
The last update on oil, had this:
“If oil and related markets like XOP, can’t hold or surpass those highs, well then, we have our answer (not advice, not a recommendation).”
Friday’s volume was characteristic of a blow-off move.
As noted on the chart, last time there was comparable volume, printed over three years ago; USO peaked, retraced, made slight new highs, then sideways-to-down, for years.
Stay Tuned
Charts by StockCharts
The Danger Point®, trade mark: No. 6,505,279
