S&P rallies 50 points in 24 hours; do you believe the oil rally?

Discussion in 'Stocks' started by Phill Twist, Feb 13, 2016.

  1. The market cannot decide how it feels. All week we were in the quasi-panic mode that has characterized the entire year. Oil down. Bond yields down. Gold up. Yen strengthening. Global stock markets down.

    Then, everything changed at 2:30 p.m., ET, on Thursday. That's when oil, which was trading at $26, a 12-year-low, turned around on remarks from the UAE oil minister that OPEC may agree on a production cut.

    No one believed that, but the world changed. Everything reversed! Oil rallied! Bond yields rose! Gold went down! The yen weakened!

    Stocks rallied! The Monkees announced a world tour! (OK, it wasn't yesterday but they really did).

    Signs and wonders! And that trend continued into Friday. In fact, the S&P has rallied about 50 points since 2:30 p.m. Thursday.

    This is all the more remarkable because we are going into a three-day weekend, and you know the drill...with all the volatility, traders are wary holding positions when China will reopen on Monday and our markets are closed.

    But that wasn't a worry today.

    What's it mean? If oil puts in a convincing bottom, that would be important. But nothing has happened to indicate that it has. Nothing!

    Next week, we'll hear from ECB head Mario Draghi, who speaks in Brussels Monday; Japan reports fourth-quarter GDP; and we'll hear from the big retailers, including Walmart.
     
    tina99 likes this.
  2. Handle123

    Handle123

    I sure hope so as I been buying this instrument along with other energies on/off since 60, even being hedged does not assure no loss. Had nice pop from late March up to hit first target, but since then it been small losses between futures and hedges. I don't go by fundamentals at all, I can't test those, so fundamentals are more of a watercooler dialog. Other day it broke lows of Sept 2003, next pivot down is 24.13 of April 2003, 23.70 of Nov 2002 then 17.55 Nov 2001, 16.10 June 1999 and finally 11.26 Feb 199 and 11.10 Dec 1998, 10.55 July 1986 at which time USA will be turning off all pumps. I could be wrong but it takes $8.50 in costs for barrel of oil from pumps? Am not sure, everyone has different costs.

    But the refineries are making good bucks as unleaded gas should be lower at the pumps.
     
  3. "What's it mean?"

    Just look at the SPY chart and ignore all news. S&P is trying to hold support, look at the weekly chart going back a few years.

    1,800 or thereabouts is a key area for buyers, and on Friday the buyers came in.

    Like the OP said, "I don't go by fundamentals at all."

    I'm betting on the oil rally, with XLE and the refiners via long calls.
     
  4. Long here ES from low 1830s.
     
  5. cvds16

    cvds16

    oil had an engulfer on the hourly at a trendline, that turned into 8h engulfer, made a daily pinbar that broke out to the upside ... so yes oil is going up for a bit more ... oh and that pinbar made in total a morning star situated at a weekly level ...
     
  6. Right, last week was extremely frustrating as a short. More of it is detailed in my journal, but we started the week with an overnight move down but most of the big moves that took place intraday was on the buyside. Monday slow drift down into a close of huge buyers, Tuesday open huge surge of buyers which led to a slow drift down into a huge wave of buyers at close again, Wednesday continued with the huge surge of buyers-which led me to sell on spike and then chop for a few hours into just selling......then overnight a huge move down takes place.....but at the open of Thursday, a huge surge of buyers with a slow drift down then a huge surge of buyers near the close and finally Friday, nothing but slow grind up the entire session.

    So even though we ended the week lower, and made a lower low(except YM) it feels like bulls won the entire battle. Thursday's overnight low seems like an intermediate low and as you said with US being closed Monday and China reopening, shorts were wary.

    That being said a lot of oil stocks like XOM are looking interesting but I am no expert on charting CL. VIX has hit my target and Yen as well as the Nikkei have hit intermediate support.
    I'm still not convinced the full low is in, but merely an intermediate low. Will have to look at many charts over the weekend, adios.

    Now let's see if these ramp ups were legit, or merely trying to make shorts cover.
     
  7. yes, there is no question that OPEC and Russia/Iran will indeed reduce production cooperatively as they all have it in their best interest as friends and close allies. In fact, as Iran has just been allowed to start selling oil I am sure they will be fine with an immediate cut in production. And the fact that Saudi and Iran are in cooperation on some many topics, there will be strict adherence on all sides. Its really a no brainer..a.done deal.

    And yes, I am loving the upside potential of the S&P charts, the wildly positive news and especially loving the notion that the Fed has things so very well in hand. I mean "what could possibly go wrong" with a long position here...its really a no brainer....a done deal.

    I see this extreme buying at every S&P swoon becoming long-term, as it clearly has developed into a 'sound strategy' for prudent investment. In fact, I don't see any of the average investors, the buy and holds, selling here. I see them loving the markets right now and sleeping soundly. And yes, whom ever is buying these down drafts will have no problem single handedly holding up the market even if long term investors start to flee and sell in large numbers.
     
  8. cvds16

    cvds16

    one more thing regarding oil: I see that it hit a downsloping trendline on the weekly too ... they don't get any better for being long ...
     
  9. In my opinion this is still only a correction in the West Texas and an opportunity to short further. In my analysis they is no reason to think it will continue on the long side just yet.
     
  10. Look at this article on Reuters, http://www.reuters.com/article/us-usa-stocks-weekahead-idUSKCN0VL2BM


    "But recent trading action on an intraday basis suggests investors may be starting to warm up to stocks again. In three of the last four losing sessions, late-day buying took over in a pattern that had begun to emerge at the end of January.

    Jack Ablin, chief investment officer at BMO Private Bank in Chicago, views that as a positive sign. He pointed out in a recent note to clients that the so-called Smart Money Index, which compares trading action at the beginning and end of day trading, appears to have bottomed on January 12.

    The rationale behind the index is that professionals tend to dominate activity later in the trading session, and buying in the latter stages is a positive signal.

    "My suspicion is that you are seeing institutions nibble at extremely compressed valuations," said Peter Kenny, equity market strategist at Kenny & Co LLC in Denver.

    "The bottom line is, if you are ending the session with a positive trend, that tends to give the impression that there are buyers out there."

    However, while late-day buying may be a good sign, it also could be preventing selling pressure from being exhausted - the so-called "capitulation" that some market watchers are waiting for before they race in to buy. Even Ablin, who sees the bright side, says shares have to fall another five to ten percent before they are fairly valued."
     
    #10     Feb 14, 2016