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Crude oil has been in a short-term bearish trend since early November. Overall picture: It is in a large trading range. After spending so much time getting knocked down, it’s finally his turn. This looks more promising than the last rally as the PMO has not confirmed it.
The price has failed to break out of its bearish trend channel, but today’s major gap-up move suggests that it might be. The indicators also speak for a breakout. That Relative Strength Index (RSI) just moved into positive territory and the PMO triggered a crossover Buy signal today. That Stochastic Oscillator is also confirmed as it climbs back towards positive territory above net neutral (50).
We also track the Cboe Volatility Index for Crude Oil ($OVX). As with the Cboe Volatility Index ($VIX) on its inverted scale, we look at where it stands relative to its moving average to determine internal strength and weakness. It is currently oscillating above its moving average, which implies internal strength. We would also like to point out that we could consider a medium-term double bottom transformation.
The iShares 20+ Year Treasury Bond ETF (TLT) also saw a fresh PMO crossover, but on the downside. This PMO Selling Signal looks dangerous as it comes in very overbought territory. Rate correction is over in our view, so expect TLT to return to strong support zone at November lows. The price managed to close above the 50-day exponential moving average (EMA) but it is barely holding. The RSI moved into the negative territory and the Stochastic is falling vertically. This appears to be the end of the TLT rally as the 20-year yield recovers.
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Erin Swenlin co-founded DecisionPoint.com with her father, Carl Swenlin. She started the daily DecisionPoint blog with Carl in 2009 and now works as a consulting technical analyst and blog contributor at StockCharts.com. Erin is an active member of the CMT Association. She holds a master’s degree in information resource management from the Air Force Institute of Technology and a bachelor’s degree in mathematics from the University of Southern California.
