In a perfect world we get fundamentals, technicals, sentiment and seasonals all lined up for a particular investment or trade. How often does that happen? Not very.
In this case we have fundamentals that appear convoluted on the world stage, technicals that are making a move but are not conclusive, and (contrary) sentiment and seasonals that are positive.
The commodity is crude oil, which we have been tracking for some time now, anticipating it to one day play “me too!” in the commodity sphere. Well, yesterday WTI Crude made its move above its 50 day moving average within a downtrend. It’s not conclusive, but it could turn out that way if it passes its coming test of the 200 day moving average.
The funda are, in my opinion, convoluted and subject to geopolitics. I am not even going to try to unwrap all that stuff.
The Seasonal pattern is positive into October.
And the commercial hedgers are contrary bullish, as they are less net short than they have been in years.
Add to that public optimism, which is depressed.
Bottom Line
Crude Oil could be readying a trend change after a long correction. That is not technically activated and will need much follow-through.
Seasonal and sentiment-wise, the picture looks good.
I am adding a second XLE (Energy sector) position as I decide whether or not to continue holding my two Gas stocks, EQT and AR. XLE is on the verge of breaking out after popping and dropping, post-Venezuela hype.
