Wednesday 2 December 2009
The message always advertises itself and its intent, although not always
clearly. Yesterday’s message was clear. The strong rally two days ago fell
short of the supply trend line off the November highs. The close was also
weak. These two little pieces of information were a message from the
market that a pull-back of some kind was likely. One can never know to
what degree, but at least an alert was broadcast.
We had been long from the previous day and took profits on the rally,
standing aside once it became apparent that price was not following through.
The last bar on the chart is today’s activity as of mid-morning. Price, as we
write, is down another 50 more tics.
It is apparent that even with the sell-off, there is no technical damage to the
chart structure. There is still room for another 200 tics lower without altering
the bullish character we have been outlining. The only open question is where
Crude Oil will find support, and then we address how that support holds.
The main point today is to show how one can read the message of the market
and act/react accordingly.
The weekly chart gives a broader picture of the impact of the current decline.
In fact, the cluster of closes continues. We have been saying that the closing
levels are indicative of a market that cannot make any further downside
progress. There also comes a point in time when the cluster of closes can
become “once too often,” and price falls though of its own weight.
Crude Oil is not there, yet, based on what we know, but that can change any
day as new price information is recorded on the chart.
Biding time for further clarity…
