I’ve talked about the declines we’ve seen in the crack spreads related to oil refiners, but in the last trading week in February alone, the crack spreads dropped more than 25%, just massive declines. I actually can’t find a time when we’ve ever seen this type of monthly decline.
Looking at the daily chart of light crude oil, like the other commodities, declined more than 5% in February.
At the beginning of 2012 when so many things topped, crude oil went into a complete waterfall. If you think back to Valentine’s Day 2012, that’s when things started changing when commodities and currencies selling off, with the major exchanges following shortly thereafter. Crude oil’s chart is now setting up in a similar fashion, as it looks to be leading the charge down in a bearish continuation triangle pattern.
Crude oil has already taken out the lows of February, but it wouldn’t surprise that in the coming days, it’ll take out the $90 a barrel level and settle back into the $80s with a confirmed breakdown of the bearish continuation triangle. All of the indicators and oscillators are pointing parabolic south.
As such, I issued several bearish crack spread plays to my Parabolic Options, and the outlook still looks dismal for the space. While there are several contenders in this space, one of the worst of the worst names is Marathon Petroleum (NYSE:MPC).
Proactive traders can buy the MPC March 77.50 Puts at current levels and hold for my target of $4.25.
InvestorPlace advisor John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the Open, Parabolic Options and Trending123. For more information on which service is for you click here.