WTIC West Texas Intermediate Crude Oil Daily Chart Oversold Falling Wedge Positive Divergence Developing

The stock market and oil prices are connected at the hip these days. As oil goes, so goes stocks. The oil analysts and television pundits pound out the negative sentiment against oil day after day (excessive negativity hints at a recovery in black gold on the come) and Morgan Stanley, MS, was the latest to lower price targets calling for $20 oil. The cab driver told Keystone he expects $15 oil at anytime. This morning, Standard Chartered proclaims $10 oil. Do I comically hear $5 oil?

The oil charts remain attractive for a recovery and relief rally. The weekly chart wants to base and move sideways to sideways higher here forward. The daily chart shows positive divergence across all indicators in the multi-month time frame and in the nearer three-week time frame, sans the RSI that slipped away yesterday printing a lower low than three weeks ago. The negative news reports, analyst projections and doom and gloom create the downward bias in prices. The RSI may need a couple days to print positive divergence and join the universal set-up with the indicators that want to see oil launch higher from here.

From Keystone's predictions for 2016, WTIC crude oil should base this year at 27-32 and move sideways to sideways higher through the year. It will be interesting to see if the 27-28 level fails over the next days, weeks or couple months. It appears that over 90% of market participants expect oil to fail under 27 and head far lower; at least to 20; they are all standing on the port side of the boat telling each other how smart they are.

The low yesterday was 30.88, this morning price was down in the 30.66 area about 4 hours ago. Oil prices are attempting to stabilize and recover today so perhaps the possie d described above is kicking into gear creating the recovery rally. Keystone is in the 2x ETF UCO a very speculative play. USO is a safer 1x ETF as an oil long play.

If oil rises as forecasted above, then the US dollar index should leak lower. The USD actually floats higher to 99.05 as this is typed. Perhaps a look at that chart is in order. A lower dollar would send commodities higher in the short term going forward and send the euro higher. A higher euro would dampen the mood for European stocks and cause ECB President Draghi some sleepless nights. The goal of Draghi's obscene Keynesian QE program is to lower the euro to provide an edge to European exporters and manufacturers and help the economy recover. Oh what a tangled web the sick central bankers have created.

WTIC oil is up +0.5% to 31.55 at 8:13 AM EST Tuesday 1/12/16. Brent oil is up +0.6% to 31.74. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.