With all of the news from OPEC, Crude Oil ($WTIC) had a massive move this week. This is the highest weekly close since July 2015. The 12% move definitely got everyone's attention. The real debate for December is whether or not it can hold the breakout and keep moving up to $60. The volume was also very solid. That sort of confirmation is very bullish.
Natural Gas ($NATGAS) also had a big push over the last 2 weeks. Notice the inside week and then the nice surge.
I was not very happy to watch the US Indexes' price action on Thursday. The indexes did not get worse on Friday, but they look like tweezer top price bars or failed breakouts. The $SPX looks like a failed breakout. In concert with the $SPX reversing, the $NDX did not breakout to make a new high last week or this week. That non-confirmation is very concerning on such a critical week. It's a critical week because the $SPX is not holding the breakout. Normally, you want to see volume accelerate on a breakout week. The low volume of Thanksgiving week makes it look bad. I won't use that volume candle to confirm the breakout because the market was closed for 30% of the trading hours. But this week had above average volume by 10% and it was a big down week. That is a big negative. For me, that adds a big caution flag.
For the NASDAQ 100 ($NDX), the chart is troubling. After breaking out in August, we have not made any real progress. With the pullback this week, it has formed a 4-month head-and-shoulders topping structure. The neckline should be drawn at 4650 but that would clutter the chart so I didn't add another line there. We closed this week right at the same level of the 2015 highs.
On this chart, we have a test of the September and October highs. While the $SPX and the $RUT were able to break out, this index was not able to. This big reversal bar this week is ominous because of the failed test of the highs and the big volume on the move down. This chart also has the same sort of structure as November 2015 / December 2015. Remember December 2015 was the only other US Fed rate increase and we are expecting another one this month.
The $RUT reversal is also troubling. It did not make a new high this week so it is not an outside reversal, but it broke the low of last week. If you look at sunup off the the February low, we had higher lows every week and most weeks closed in the top half of the bar. This week of December 2, 2016, we made a lower low and closed near the lows which suggests the reversal is intact. We'll watch next week closely. The MACD made a higher high, so there is not a negative divergence. That's about the best news for this price bar.
There are some exciting trade ideas in the webinar. I think you'll find it very informative. Thanks for following along and enjoy your weekend.
Greg Schnell, CMT, MFTA.