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* If the dots don't connect, gather more dots until they do...or, just follow the $$$...





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Saturday, September 14, 2019

Light Crude Oil Breakout Imminent

* See UPDATES below...

Senator Lindsey Graham unleashed a series of tweets Saturday morning after learning of drone attacks on Saudi oil refineries.

I've yet to hear whether the Saudis will blame/have blamed Iran for the attacks and whether war will eventually be declared against them. It's been reported that, "Houthi rebels - who are backed by Iran in a yearslong Saudi-led war against them in Yemen - have reportedly claimed responsibility for the attacks and have vowed that further attacks could be expected in the future."

Source: foxnews.com

No doubt, this will affect oil prices when futures trading begins later on Sunday.

WTI Light Crude Oil futures closed on Friday at 54.84. As shown on the following monthly chart of CL, it's sitting just below the apex (at 56.00) of a large triangle and is about to breakout of this formation soon.

Saturday's news from Saudi Arabia may be the catalyst that catapults CL out of this triangle and to new highs for 2019 and beyond.

I've shown the ROC and ATR technical indicators in histogram format with an input value of one period. Keep an eye on the ROC to spike back above the zero level and climb higher to confirm higher prices. As well, watch for an expansion of the ATR on such a move, and, ultimately, for an exceptionally high exhaustion spike to signal either a pause in price or a trend reversal.

From the Volume Profile shown on the right-hand side of the following monthly chart of CL, major support sits at 50.00, which happens to be the Volume Profile's POC (point of control) on this timeframe.

Near-term resistance sits at 60.00. A breakout and hold above that could send price as high as 80.00, or even higher to 100.00, as others are now speculating.

On the bottom section of the following monthly chart of CL, the ratio of Oil to its Volatility Index is shown in histogram format.

Watch for it to break and hold above 2.00, and, subsequently, 3.00 on this ratio, as well as an upside crossover of the 5 and 8 MAs, to confirm the sustainability of such a price surge.

As a side note, whether a sharp rise in Oil also drags Canada's TSX Index higher, remains to be seen. Coincidentally, I wrote about such a scenario in my post late Friday night, based on different circumstances/influences.

Here's an excerpt from that article (entitled "Canada's TSX, Election and Trade Fever").


In the several hours that have passed since I posted the subject article, Secretary Pompeo has tweeted the following (he blames Iran, not Yemen, directly for the attack...reports speculate that the nature of the attack was too sophisticated to have been carried out by the Houthi rebels)...

This tweet from Reuters followed (but, exactly what "necessary measures to safeguard national assets, international energy security and ensure stability of world economy" would be taken by a Saudi-led, western-backed, Sunni Muslim military alliance, remains to be seen)...

Source: Reuters.com

And, now, these tweets ("expect chaos") surface from Zero Hedge on Sunday with a report from Goldman Sachs on oil...

Source: ZeroHedge.com

And, later Sunday afternoon, these clarifications are beginning to emerge...and it looks like uncertainty and volatility in the oil markets will remain elevated for, possibly, months...

 Source: ZeroHedge.com

Source: Reuters.com

Source: ZeroHedge.com

Click here for Bloomberg Tweet thread

The following screenshots (taken around 8:50 pm EDT on Sunday) of the daily charts of WTI Light Crude Oil (CL) and Brent Crude Oil (LCO) show that price gapped up significantly when these futures opened this afternoon...while S&P Futures gapped down and Gold Futures gapped up.

They're both hovering above prior-resistance-now-support of 60.00 for CL and 67.00 for LCO. The third chart is a monthly timeframe, which depicts LCO's new support level, as well as its next major resistance levels at 80.00 and 100.00.

We'll see whether those new support levels hold over the coming days.

Here we go...President Trump says U.S. is "locked and loaded"...

Source: ZeroHedge.com

The following is an informative interview on September 16 with General Jack Keane...(in my opinion, he should be appointed President Trump's next National Security Advisor...I've seen him interviewed many times on Fox News TV over the past couple of years, and he's a very smart, sharp as a tack, level-headed, highly-skilled and well-versed strategic military/intelligence tactician)...

Click here to listen to the interview

In my opinion, the added risk of Middle East major military instability has, now, increased greatly...and could hang on for months...contributing to elevated oil volatility for some time.

And, what could be of more consequence, is the perception, now, that similar attacks like this CAN be done...again and again...especially if there are no consequences to this attack.

So, what does this mean for the SPX?

To gauge the level of volatility and direction that the SPX may experience from Monday's open onward, keep an eye on the SPX:VIX ratio...daily chart below.

Price needs to hold above 200, then watch for a climb to, potentially, retest 250, or higher, to confirm higher prices for the SPX from Friday's close...and see how overbought the RSI, MACD and PMO are by then.

Otherwise, a drop and hold below 200, would see the SPX decline...perhaps to levels mentioned in my post of August 30.

As an aside, whether any of this affects the Fed in their decision-making on whether or not to cut interest rates at their upcoming meeting this Wednesday, and whether the SPX reacts, in kind, remains to be seen.

* UPDATE Sept. 18...Fed cut rates by 1/4%.

* UPDATE September 18...

"An Act of war"...

Source: ZeroHedge.com 

Attacks "unquestionably sponsored" by Iran...

Source: ZeroHedge.com 

"We have a major crisis on our hands"...

Click here to view video