I’ll be looking for signs of exhaustion to sell, or break down below the lows of the last 48 hours to sell.
In fact, I think this has become more or less a “fade the rallies” type of situation, as the market has been trying to focus on quite a few different things, not the least of which of course will be the fact that the market has to worry about whether or not there is going to be demand. After all, the world seems to be slowing down, which has a major effect on whether or not prices will rally.
If we were to break down below the lows of the last couple of days, it’s likely that we will continue to see noisy behavior, and therefore I think we have a situation where you continue to see a lot of momentum going into this market. This is a market that I think will continue to be very difficult to get excited about, and will more likely than not go looking to the $85 level, followed by the $80 level.
Even if we were to rally from here, the $95 level looks to be an area that is going to be difficult to break above. Think of it this way: OPEC recently had a minuscule production increase, and prices actually fell. In other words, even though they are not pumping as much oil as one would hope, it still cannot pick up prices. This tells you just how fragile the economy seems to be at the moment, and I think we’ve got a situation where you have a market that is going to continue to look at this through the prism of something bad coming. When the economy slows down, the demand for crude oil drops off the face of the earth. With this, I’ll be looking for signs of exhaustion to sell, or break down below the lows of the last 48 hours to sell.
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