A weaker labor market, manufacturing production slowing, new home prices falling and crude oil inventories rising more than expected are all to blame for the big drop in oil prices. US also eased sanctions on Venezuelan oil.
That’s the nature of commodities; fresh news can supersede older headlines and force the weaker longs out of their positions as we saw today. But…
Thanksgiving travel will goose demand. So will the decline in crude floating storage. Tankers holding crude are been at the lowest levels in 2 ¾ years.
India has increased consumption. OPEC+ will continue cuts of production.
Pick your side. I am going with “oil is the new gold.”
The futures contract (December) looks oversold and into support at $72.00 per barrel. The USO ETF chart just broke the July 6-month calendar range high (horizontal green line) and is looking oversold. More importantly, 67 is huge support so we are close if not at the bottom.
And if oil is the new gold, you buy it when it looks awful, and sell it when it looks strong.
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Mish in the Media
Mish and Charles Payne discuss why the small caps, now in mid range still have a chance to rally in this appearance on Fox Business’ Making Money with Charles Payne.
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Mish talks bonds with Charles Payne in this clip from October 27, recorded live in-studio at Fox Business.
Live in-studio at Yahoo! Finance on October 26, Mish does a chart deep dive with Jared Blikre.
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ETF Summary
S&P 500 (SPY): If 450 clears, seeing 465. Under 450, 435 support.Russell 2000 (IWM): 181 resistance, 174 support.Dow (DIA): 360 resistance, 346 support.Nasdaq (QQQ): 388 must clear and 370 must hold.Regional banks (KRE): 45 big resistance.Semiconductors (SMH): 160-161 now pivotal.Transportation (IYT): 235 support.Biotechnology (IBB): 120 pivotal.Retail (XRT): 65 resistance and 60 pivotal support.
Mish Schneider
MarketGauge.com
Director of Trading Research and Education