Saturday, 6 October 2012

WTIC Oil - second red flag warning achieved

WTIC Oil closed the week lower by 2.4% to $89.88. After waiting for some weeks, WTIC Oil has met my price target, and I'm calling it my second red flag warning for the Autumn.

WTIC Oil, weekly

WTIC, monthly


So, we have a weekly close under $90, and that is pretty suggestive of further weakness into the Autumn. Interestingly, the monthly rainbow chart is now sporting a red candle!

Next downside target is the big $80, and then a test of the June low of $77. If we take out 77, then my very bold primary target of $60 is viable. Of course, that level would probably equate to an equity market that has seen considerable declines, somewhere in the region of 15/20%...sp'1200.

It is certainly something to keep in mind as proceed this October.

Two Red flags

1. Transports, monthly close in September <5000, and confirming the weakness in August
2. WTIC Oil, weekly close <$90

My third red flag target is a weekly VIX close >20. The big 20 is some 35% higher than current levels, we'll need some major VIX jumps higher, and those jumps will need to hold just to have a chance at closing the week above 20.

If we can get this third red flag achieved by the end of October, I seriously think the bears have a real window of opportunity to smack this market lower. The target would be somewhere in the sp'1200 area. Right now, that looks a very...very long way down.

Goodnight from London