Crude Realities

West Texas Intermediate Crude Oil (WTIC, $CL_F, $USO) looked read to head to the stars this summer. In July in Time to Strike a Gusher in Crude Oil with Crude at 101 it had a a very bright future and a retest of the all time high at 147 was in the cards. Things got a little more cautious after it consolidated and in August in Embrace the Crude Oil Move Higher 120 still seemed within reach. It got as high as 112.24 on a rolling forward basis but then fell on hard time. With the move lower Monday it has now retraced about 50% of the move higher and the prospects look better for more downside. Perhaps the

oil

200 day Simple Moving Average (SMA) underneath will give it support, but a move lower to the 61.8% retracement at 96 or support in the 90-92 area looks very doable. There are many macro characteristics of the market that this favors. First, there is no conflict that is flaring up to raise the cost of oil which could also create a nervous environment for stocks. It also suggest that inflation is not a problem. Lower Oil prices leading to lower gas prices is also often used to show a positive environment for the consumer. What is your Crude Reality?

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