Rising Oil Prices Pressures Market As Winter Arrives!
FUNDAMENTALS
Winter is here at last, raising oil prices as heating oil demand is expected to rise. Oil price picked up by $1.20 to close up at $53.78 and has clearly added pressure on the market despite a rush of great earnings release by giants like Yahoo and UTX. If oil inventory numbers come in unfavorable tomorrow, oil could stage a rebound and rally as this ditch in oil price has been caused by a severe drop in heating oil demand so far due to a warm winter. Oil inventories will be announced tomorrow at 10:30am EST. As we have witnessed today, rising oil prices had a definite effect on investor sentiments as major indices fell from the skies as oil prices rose in the afternoon. We will be watching oil prices very closely.
TECHNICALS
Markets are mixed today as oil staged a come back. The Dow was not affected as it moved on to completing yet another step in its staircase formation. Nothing that happened to the Nasdaq composite seems to have affected the Dow in any ways and from its chart action today, we should see a new high coming up either late this week or early next week. The Nasdaq composite closed sideways yet again after struggling aainst a 2450 psychological resistance level for half a day. This is the second day the index has closed marginally below its 50 days moving average as downside momentum indicators continue to look strong. As I have said before, if it fails at this level, it would not be surprising to see a testing of the 2400 support level soon. Breaching that level would qualify the Nasdaq composite for a bear trend. So, make sure your tech longs are already out and have your tech put options ready. Oil seems to be waking up right now as it forms a rounded bottom formation off its $50 support level. A full scale rebound off such a formation is not common as this kind of formation do not show a strong conviction to upside. It usually laspe into a cup and handle formation before rallying, that is, if it survives long enough to form the handle part of the formation. Overall, oil is still in a full scale bear trend with a short term pullup being witnessed right now, until we see more evidence of a rally, oil remains bearish.
.
Winter is here at last, raising oil prices as heating oil demand is expected to rise. Oil price picked up by $1.20 to close up at $53.78 and has clearly added pressure on the market despite a rush of great earnings release by giants like Yahoo and UTX. If oil inventory numbers come in unfavorable tomorrow, oil could stage a rebound and rally as this ditch in oil price has been caused by a severe drop in heating oil demand so far due to a warm winter. Oil inventories will be announced tomorrow at 10:30am EST. As we have witnessed today, rising oil prices had a definite effect on investor sentiments as major indices fell from the skies as oil prices rose in the afternoon. We will be watching oil prices very closely.
TECHNICALS
Markets are mixed today as oil staged a come back. The Dow was not affected as it moved on to completing yet another step in its staircase formation. Nothing that happened to the Nasdaq composite seems to have affected the Dow in any ways and from its chart action today, we should see a new high coming up either late this week or early next week. The Nasdaq composite closed sideways yet again after struggling aainst a 2450 psychological resistance level for half a day. This is the second day the index has closed marginally below its 50 days moving average as downside momentum indicators continue to look strong. As I have said before, if it fails at this level, it would not be surprising to see a testing of the 2400 support level soon. Breaching that level would qualify the Nasdaq composite for a bear trend. So, make sure your tech longs are already out and have your tech put options ready. Oil seems to be waking up right now as it forms a rounded bottom formation off its $50 support level. A full scale rebound off such a formation is not common as this kind of formation do not show a strong conviction to upside. It usually laspe into a cup and handle formation before rallying, that is, if it survives long enough to form the handle part of the formation. Overall, oil is still in a full scale bear trend with a short term pullup being witnessed right now, until we see more evidence of a rally, oil remains bearish.
.
Labels: fundamental analysis, investment, share market, stock market, stocks, technical analysis
posted by Jason Ng at 5:25 PM
<< Home