Oil is on track to post its third weekly loss, with U.S. crude down 2.2% and Brent off by 2%. U.S. inventory builds, a global glut and a Fed rate hike are still the usual story, but two new factors could crank up more pressure. The IEA predicted today that oil markets will remain oversupplied at least until the end of 2016 – due to sluggish demand and OPEC’s failure to curb production – and the U.S. looks likely to lift its four-decade-old crude export ban (see below) in another few hours. (Source: Seeking Alpha)
9:45 PMI Services Index Flash
10:00 Atlanta Fed’s Business Inflation Expectations
11:00 Kansas City Fed Mfg Survey
1:00 PM Baker-Hughes Rig Count
We stated in prior DTS 12.17.15 “Cycle targets have been achieved and exceeded…Momentum may take price higher before the next decline begins...Violation of 2056.50 would be first sign of price weakness” …Price failed to hold above prior high (2068.75) and broke below 2056.50 which initiated this cycle’s decline, giving up all the Fed Day price gains. Quadruple Options Expiration today, so expect a bit more price volatility before everyone begins their Christmas Holiday vacations.
Today is Cycle Day 1 (CD1)…NORMAL SPILL DOWN…Much of this cycle’s price decline is is place…Residual price weakness may continue before a rally attempt occurs…Expiring Options should be the dominant force today.
Odds of Decline > 10 = 72%; Odds of Decline > 20 = 42%; Average Range = 18.75; Max Average Range = 22.50; Possible HOD = 2042.50 (3D CPZ); Possible LOD = 2005 (CD1 Violation Level).
***Note: The odds highlighted are NOT predictions or trade recommendations, rather a guide based upon historical observed occurrences.
Today’s Hypotheses: March 2016 (H) Contract
*****The levels outlined below are more general framework within a larger range…They are to be used are reference prices from which to consider trade opportunities, not hard trade levels.
Scenario 1: IF price holds above 2014.50, THEN initial objective will be to clear and convert PL (2023.25)…Should this occur, upside objective targets 2028.00 – 2031.00.
Scenario 2: Failure to clear and convert PL (2023.25) keeps selling pressure intact with potential of pushing price lower targeting 2008.50 – 2005.00 zone. Violation of this zone increases odds of retesting 12/14 lows.
Trade Strategy: Our tactical trade strategy will simply remain unaltered…We’ll be flexible to trade both long and short side from Decision Pivot Levels. Continue to focus on Bull/Bear Stackers and Premium/Discounts. As always, remaining in alignment with dominant intra-day force increases probabilities of producing winning trades.
Stay Focused…Non-Biased…Disciplined ALWAYS USE STOPS!
“Knowing is not enough, We must APPLY. Willing is not enough, We must DO.” –Bruce Lee
*****This trade strategy report is disseminated for “education only” and should not be viewed in any way as a recommendation to buy or sell futures products.”
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS