Fly on WallStreet

Oil has assumed a leadership role since 2004 and while many smart guys would be tempted to try and call a top at the psychologically important $100/barrel price level, my preference is to stick with the prevailing trend. The chart below provides a different perspective than last night's which speaks to the subjectivity of chart reading and perhaps "The Fly's" aversion to it.


The chart above uses a box size of 25 points instead of the default 10 points used in last night's chart. The larger box size reduces whipsaws and also illustrates a potential triple top at the 1500 price level which last night's chart did not. Right now the trend is directionless.

The market has a tendency to retest price levels which is why I would not be surprised to see continued weakness in the XOI in the coming weeks should the market continue to get pounded because of the failing financials. My game plan is to look for entries in leading Oil and Oil Service names when and if the XOI probes the 1400 level in another attempt to shake out the weak hands.

Alternatively, should the index regain its footing, any move above 1525 would signal a very important triple top breakout and affirm a continuation of the uptrend. In that case, refiners such as VLO and other Fly favorites should be bought aggressively.