Linda Raschke Blog

For how many weeks has Goldman Sacs been calling for a push in crude into the Fourth of July?  Probably in what was one of the more widely forcast market plays, crude rallied close to 146 - just 4 dollars shy of their forecast put out many weeks prior.   Forget the fact that crude fell shy of the forcast target, the time factor is what is more important. (push  into July 4th).  Now there are daily momentum sell divergences as well as volume divergences (higher high made on lighter volume).

A retrace back to the daily EMA basis the August contract, would be 138.30.   133 - 136.50 contanined the percentage of the previous trading range's action.  (back into value area)

 

The spread between the equity relative strength leaders and relative strength laggards has never been greater.  At top of the relative strength leader list  has been oil, coal and steel. 

The XLE has hit an upside wall.  Though we rarely suggest shorting relative strength leaders, it does look like calls can be sold on the XLE.   The market is extremely oversold by many technical measures.  However, the downside momentum  has been so strong, that upside should be limited on any reactions.   More likely, a brief trading range can form at these levels where the spread between the laggards and leaders starts to narrow by a nominal amount.