What does WTI Crudes decline mean for Energy?

Key Takeaways

  • Monday’s decline brings prices closer to trading support at 50% retracement levels
  • Treasury yields likely push higher to 3.00-3.25% in TNX into May
  • Crude Oil’s decline looks temporary only and should lead to buying opportunities

The pullback in S&P has now produced losses in six of the last nine trading sessions, with prices approaching the 50% retracement level of its rally off of mid-March lows.  Overall, nothing has changed in my thesis. Near-term, I am expecting a trading low to develop, and for prices to push higher into April expiration.  Three reasons look important in this regard: First, DeMark exhaustion is close to lining up on a few different timeframes.  Second, my cycle composite shows an upward slope over the next 1-2 weeks before fading.  Third, 50% retracements often are important to consider as support, particularly when sector performance showed four sectors positive in Monday’s session: Staples, Industrials, Materials, and Discretionary.  Thus, this pullback looks to be nearing an important spot for near-term tactical trading opportunities, and I expect a trading low to develop above 4380 up to 4415 for SPX.

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