Energy Prices Vulnerable Should Equities Selloff

On December 28, 2012 by TradingDesk

Thursday’s price action was all about US budget headlines, with an early warning from congress that a change to the Budget Control Act of 2011 would not be made prior to it taking effect next week sending stocks into a sharp selloff. An afternoon headline that congress would return to session Sunday night, with a full 24 hours to wrap up an issue they’ve failed to resolve in the past 17 months, reversed the course of the market and nearly all of the losses were wiped out. Energy prices followed the equity lead, and ended the day with slight gains.

The government threw the market another curve ball by delaying the DOE report until Friday, so at least traders will have something to look forward to on what is otherwise likely to be another low-volume trading day. The bulls have clear control over the charts for the moment, but the lack of volume and overbought indicators leave prices vulnerable to a sharp selloff should the selloff in stocks continue.

CLICK HERE for a PDF of this morning’s charts

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