Will Oil Lead The Markets Lower? OIH And ERY Analysis

July 15th, 2009

Even in the front of this perma-bull talk out there today you have to wonder…if everyone is expecting a rally back to 1,000 on the S&P and Oil at $80 a barrel, WHAT IF the complete opposite happens. What if everyone is completely wrong about this “rally to 1,000″ as I’m seeing all over the place. As I’ve already said, the markets this week have reached a very over-bought level on some indicators in a very short time and are still well below the recent highs from June. Of course I don’t mean to sound like an ultra-bear, but I just see too much toppy action here and too much hype to scare out the beginners from the professionals.

 

Personally, I think Oil is just shaping up to be the big thrill ride. Take a look at ERY. It clearly moved off the lows from June (where we made 40% in a long trade if you don’t remember) and hit EXACTLY the Support/Resistance line in black. Amazing right? Now that it’s come back down, it could very well find support in the BLUE area around $20 before rallying higher (i.e. Oil falling much more).

 

ery

 

OIH is also having a great week but still remains below it’s recent highs and losing steam very fast. Not to mention the volume really dropping off from early July. A move back down to around $90 is very possible here perma-bulls.

 

oih

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