Crude Oil, Platinum and US Stock Market

Crude Oil, Platinum and US Stock Market

This week the opportunities you'll find here in this post will be connected to the Coronavirus. After the cases outside of China started to increase, especially in South Korea and Italy, unfortunately, we haven't seen the end of it. Not yet. 

The negative effect on the economies of more countries will hurt the global economy. 

CRUDE OIL

The latest COT report shows a slight decrease in the Commercial's net position (see the chart below). Which might mean that they've paused their buying program earlier. So far in 2020, we saw a big decline of Crude Oil prices and a breaking below the last significant bottoms. But no matter, that the price is going down, the Commercials did not increase their buying. And now they might have paused their buying program. 

Crude Oil Futures analysis for 02/24/20 - 02/28/20

Such activity is not an indication of an upcoming uptrend. Also, such behaviour is not in line with the seasonal period suggesting higher prices. I think the Commercials do that because they expect lower prices in crude oil. Which can be justified with further slowing down in the Chinese and global economy.

If I see a complex price action short signal, I'll take it.

PLATINUM

If you missed the action in Gold or Palladium, this might be something worth considering.

I am not sure if Platinum is the right instrument to protect yourself from the negative effect of the virus outbreak, but still, it is a precious metal. That is why it on my watch list for the last week of February.

Platinum Futures analysis for 02/24/20 - 02/28/20

The seasonal chart is showing that there is room for one more push to the upside starting this week. Neither OBV nor volume are showing signs of major distribution.

Friday's price action suggests further weakness. But if on Monday or Tuesday the Platinum can break above Friday's high, we can expect it to go higher. Maybe towards 1010-1020 zone. 

US STOCK MARKET

Good earnings season and the coronavirus, what a combination!

US indices were the first to recover and make new highs from all instruments which fell when the coronavirus hit the news for the first time. Now those indices are going down again for the same reason. The problem right now is bigger because the virus is hitting more and more countries. That will reflect on the stock markets.

Look at the next chart. It is a special instrument designed by IG, which shows the movement of Dow Jones during the weekend.

Dow Jones during the weekend

Source: https://www.ig.com/en/indices/markets-indices/weekend-wall-street 

Currently, it shows that Monday will begin with a gap. That in combination with Friday's bar (NBB) shows that with higher probability we can expect Monday to be a down day. To be concrete that probability is 60% for the S&P500 and 78% for the Dow Jones (It is an N1xN bar).

Seasonal chart and cycles also show we can expect a dip now.

So how low can it go? On Monday we'll most probably see some emotional reaction to the latest coronavirus news. This could mean a large range down day. On the chart below I've marked (being fully aware of how difficult is to forecast such emotions) some levels where the market might find support.

S&P500 Futures analysis for 02/24/20 - 02/28/20 


That is what I think is the most logical to happen. But If there is no big down move and the gap is filled that would be a first signal of the resuming bullish scenario.


Now, let's find your missing piece!

Vassil Banov,
Founder of Piece of Trading



Trades mentioned here are either taken or will be taken by the author if the right conditions appear. They are NOT recommendations nor any of this constitute investment advice. Please read the Risk Disclaimer

Seasonal indicators courtesy of Larry Williams, ireallytrade.com. Charts made with TradeStation®. tradestation.com

TAGS: S&P500, SPY, SPX, COT, Commitments of Traders, Platinum, Dow Jones, Cycles, Seasonality, Crude Oil, Price Action Trading

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