Oil Takes a Breather

We’ve been watching the effects of “oil gone wild” with great interest, especially since Aug 3 when it tagged our downside target and began its latest 25% spike.  As we discussed at the time [see: The Not So Invisible Hands Guiding the Market], it has been TPTB’s primary tool for pushing stocks higher since the yen carry trade started fizzling in Jan 2016.

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The impact of CL ramps has been moderating, though.  Apparently, even the algos understand there is an upper limit to this game.  CL reached 49.36 on Friday, just a smidge below our 50 target.
2016-08-22 CL 60 0600

The big question now, is whether it can properly flesh out something resembling a channel, and backtest the large white channel it left behind on the 16th.

We remain short on SPX, with Friday’s targets still in place.

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