Wednesday, December 23, 2015

Dec 23 - Seasonality tailwinds strong for equities, buy signal USO

Very strong movement in equities and my 20/20.5 VXX put spreads triggered sale as did my SPY call spreads.  I picked up some USO as it triggered a buy on the hourly and daily but will be weary if this is yet another short term spike.  The positive divergence makes for a very good set up so if it does hold today, we could see a decent spike in the next few days.

Although price action is saying more upside, we are very overbought on the hourly and might see a pullback.  I am not betting on it though in either direction.

If we top out at upper end of the range, would make a good short set up
 Great long set up in USO.  Whether we can build upon gains is a question.
 Buy signal and decent volume.
 Will probably go short equities when VIX gets oversold by end of year, early Jan

1 comment:

Doug said...

The problem with oil is the supply/demand situation remains unresolved. Demand is weak, supply is strong. It's amazing that shale oil production is not falling that much, although it's down. Those wells have exponential decline curves (then plateau at low production levels for a long period). Seems like Saudi Arabia is in an oil war with Russia, Iran, US Shale producers and Canadian oil sands.

These low oil prices are going to create defaults of debt in entire countries and many companies. But it's worse than that. ALL commodities have crashed. So EVERY commodity producing country is in recession and soon depression.

Oil is bouncing and there is some short covering, but I think it keeps going down. The winds of deflation are blowing strong out of China and elsewhere. Only prices that shutdown production will stop the decline unless China does a big stimulus or Saudi cries "Uncle."

Just an opinion. Merry Christmas!