Oil Continues To Be The Focus Next Week...

Yes, there is but one main focus next week... crude oil prices. Crude oil price is the final straw that will release the full power of the rally but it stubbornly remains strong around the $125 level. Over the past 5 days, we saw significant selling pressure for oil but has not seen prices come down significantly at all. If oil should break the $130 level, the pressure on the market could be so great as to make it improbable for the Dow to make a definite break above the 13000 level. The Dow has mustered enough energy to go all the way up to the 13000 level once again last week but disappointed us by not making a breakout. A look at the Dow daily chart showed that the 13000 resistance level is reinforced by the 200MA which is forming an obvious ceiling. It is certainly going to be an uncertain week ahead that will be based tightly on how the price of oil moves. The fundamentals for oil is strong but that fundamental is fast eroding due to the immutable law of supply and demand. And yes, the demand for oil is now far less inelastic than a lot of economists think. This is the time to be nimble.


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