Outside commodity spreads we also trade SPX options for our customers, and the last few weeks we have been in a chop fest of volatility and false breaks. Fundamentally we see some of the leading economic indicators coming out in line or doing a little bit better then what “analysts” expect. We do see this generally as a good thing, but we are technical traders and we are watching our trend lines very closely.
Our first chart is a weekly look at the E-Mini S&P 500 Futures. Theres not much to say on this chart except we are in a strong bull market and if any bears think we could crack must be mindful of that trend line. That trend line has held for the past 3 years, but any major crack of that line with higher then average volume should be considered extremely bearish. Until that line is cracked, I would bet that this market continues in its path higher.
Crude oil is one of our favorite things to trade calendar spreads on. As a matter of fact we closed out a couple profitable position this week and we are already back in another spread. (Short July/Sept @2.00) But today we will be looking at front month crude oil and give you our technical opinion on it.
The chart above is a daily price action look at Crude Oil. Crude oil typically trades very technical, unless we see an unexpected inventory spike in either direction or we have broadcasted geo-polictical risk. We feel the pattern crude is in right now is fairly neutral to slightly bearish, at least bearish in the short term. A great indicator we look at are the topping tails on the handful of candles right around my trend line, this is a perfect scenario where there is a battle for control from the bulls and bears. We think the bears could have this one, and our answer simply put is because of the double top put in at around 105. Thats our bear side of the story, our bull side is less convincing, but if we continue to tap on that trend line with no push lower we could see a short squeeze that pushes us up to 108 and change. So we are neutral to slightly bearish crude for those reasons, but we do have a bear spread on currently. We will be watching to see if we get a break of that double top with higher then normal volume or we get a push lower back to 101.50.