WTIC oil is important as alluded to in other posts this morning. Crude has been leading the euro and all three, crude, the euro and the SPX move in the same direction. Starting from the top down, the weekly chart shows the obscenities called quantitative easing. Who does not understand that markets are propped up by the Fed's and ECB's easy money policies? Note how each money pump decreases in its oomph and each one helps create the narrowing of the sideways symmetrical triangle. 2013 will be an epic year for markets. Oil will be making a major decision in the weeks and months ahead. Either collapse out the bottom at 87 which takes us far lower and likely into Keystone's deflationary scenario, or, a breakout above, at 97 right now, or even at 94-95 in the spring or summer, to send oil higher as the inflationary outcome is the path forward. Note how volume continues to trail off over time, far from the go-go juice days in 2010 and 2011.
The daily chart shows the W pattern bottom a very powerful bullish pattern. The strength can be measured by how far the W is under the 50 and 200-day MA's. The W formed almost completely under so it had juice, and the 84 bottom and 90 breakout targeted 96 which was easily achieved and the extra juice took it to 97-98. The red lines show the sideways channel in place through 95-98 and negative divergence creating the malaise right now that should roll over into more negativity. The important 95.50 support was highlighted last week and if you recall, last Friday price was playing around at 95.50. An island reversal would occur if price drops from 95.50 to 95.00 and lower, through the gap. The loss of the 95.00-95.50 support will take price to 93 support.
Projection is for oil to pull back in here to honor the sideways triangle pattern on the weekly chart. The negative divergence on the daily chart should create weakness moving forward. A move to, and failure at, 95.00-95.50 is anticipated. Down oil means down equity markets. Up oil means up equity markets. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added 2/15/13 at 11:17 AM: Crude oil sits at 95.50, dropping from 97 earlier this morning to under 95.50, now recovering to 95.50. The critical test of 95.00-95.50 support continues. The next few days for oil are critical.