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Notice the following on the weekly chart:
-- Prices are near their lowest level in three years
-- All the SMAs are moving lower
-- Prices are below all the SMAs
-- The shorter SMAs are below the longer SMAs
BUT
-- The RSI is oversold and
-- The MACD is oversold
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Notice the following on the daily chart:
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Prices have been bouncing from the 20 day SMA for the last three months
BUT
-- The MACD has been increasing for the last few months.
Bottom line: The market is technically oversold right now. But there are no fundamental events strong enough to move the market higher. Consider the following:
Since September, members of the Organization of the Petroleum Exporting Countries have pledged cuts totaling 4.2 million barrels a day, or nearly 12 percent of their capacity, a record in such a short time.
The bottom line is a lot of capacity is going off line (at least theoretically). If a 10% cut in production isn't strong enough to move prices higher, then it's going to take a lot more. My guess is from here oil will try and form a bottom to rally from.
