Navigating Energy Markets: Bullish Momentum and New Buy Signals
Charting the Course: New Buy Signals and Positive Momentum
Brace yourself for a potential move as we witness a convergence of energy signals – both short-term buy indications and full buy signals across various sectors, ranging from natural gas to heating oil. Are you prepared for what’s ahead?
The technical aspects are truly remarkable. The momentum is palpable, with all indicators pointing upwards. This mirrors the initial stages of bullish movements, which often exhibit a certain level of unpredictability and volatility. Yet, it's important to remember that with great potential rewards comes inherent risk.
Our journey into this trade was sparked by a blend of sentiment and positioning analysis. While the COT (Commitment of Traders) reports had been persistently advocating for a long position in this sector, our approach involves waiting for the market to validate our insights. However, one thing was crystal clear – a significant market shift was on the horizon for this sector. Whenever sentiment becomes exceedingly skewed, and negativity abounds, it's akin to a spring ready to uncoil. The prevailing sentiment around this sector continues to carry a pessimistic tone. Speculators remain rather cautious, with only a modest 25% being positioned on the long side.
Delving into inter-market analysis, we find that energy remains historically inexpensive compared to a wide array of other assets. This strategic insight underscores the potential for energy's upward trajectory in the long run.
As we ride the tides of energy, remember that a calculated risk can pave the way for remarkable rewards.
Lets look at it…
On a one month time frame we are starting to see relative strength.
On a 3 month time we are seeing OIH in the lead with XLE catching up fast.
XLE is making a 100 day high and holding on to the primary trend.
Natural gas has given the first buy signal since it was sold in mid 2022.
Oil is also making a 100 day high. It has joined gasoline, heating oil, the energy sector… Tony Greer from TG Macro put it this way… “Sep/Oct WTI held 42 cents and rallied toward 60 cents by the close. Sep/Oct gasoline held 22 cents and bounced sharply. Sep/Oct diesel saw an outside reversal day UP at the bottom of a 50% pullback. The crack spread came back “FORTY BID!” The cherry on top of the cake is WTI breaking the range top. This is what bull markets look like.”
Have a great week everyone!