Oil’s Chart Bodes Well for the Bulls

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Stocks closed slightly lower Friday amid comments from Federal Reserve members that raised investors’ expectations of a rate hike. Fed Chair Janet Yellen is scheduled to speak on Friday at the annual Jackson Hole meeting, but don’t expect a definite date to be announced at that meeting.

Last week, we saw a number of retailers deliver strong quarterly reports, including Gap Inc (NYSE:GPS), Foot Locker, Inc. (NYSE:FL), L Brands Inc (NYSE:LB), Urban Outfitters, Inc. (NASDAQ:URBN) and Wal-Mart Stores, Inc. (NYSE:WMT) (see my Trade of the Day).

Rumors of a production freeze among OPEC producers continued to have a positive impact on oil prices. WTI crude hit a seven-week high on Friday and closed up 0.6% at $48.52 a barrel.

At Friday’s close, the Dow Jones Industrial Average fell 45 points to18,553, the S&P 500 lost 3 points at 2,184, the Nasdaq was down 2 points at 5,238, and the Russell 2000 was unchanged at 1,237.

The NYSE Composite’s primary exchange traded 844 million shares with total volume of 3 billion. The Nasdaq crossed 1.6 billion shares. On the Big Board, decliners outpaced advancers by 1.5-to-1, and on the Nasdaq, decliners led by 1.1-to-1. Block trades on the NYSE increased to 5,389 from 4,469 on Thursday.

For the week, the Dow lost 0.1%, the S&P 500 was unchanged, the Nasdaq gained 0.1%, and the Russell 2000 rose 0.6%.

USO Chart
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Since boring is bullish, and we should not sell into a slow, boring market, today I want to focus on the chart of the United States Oil Fund LP (ETF) (NYSEARCA:USO), a commodity ETF that tracks the price of WTI oil.

USO fell from about $40 in June 2014 to a low of $7.67 in February. A recovery rally was halted in early June when it was reported storage containers in Oklahoma were bursting with oversupply. Prices fell and successfully tested the February low.

The recent rumors of an attempt to limit OPEC production have driven WTI futures to almost $50 a barrel, and USO jumped through trendline resistance. An increase in volume confirmed the breakout. Support is at the conjunction of the trendline and 50-day moving average at $10.84.

The trend is up, and as long as talks of reducing volume continue or OPEC makes a deal, USO should continue higher.

Conclusion

As earnings, oil prices and Fedspeak go, so goes the stock market.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.


Article printed from InvestorPlace Media, https://investorplace.com/2016/08/daily-market-outlook-oils-chart-bodes-well-bulls/.

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