Flirting With A Significant Bear Market

On April 18, 2013 by TradingDesk

Refined products fell sharply again Wednesday, following another bearish DOE report that showed domestic demand continuing to stagnate. HO lead the move lower, it’s 6th straight day of losses, and ended at its lowest level of the year, near the $2.70 floor that has played a key support roll several times during the past 3 years. RBOB also flirted with breaking $2.70, and to its lowest levels of the year, but like diesel, was unable to break through. Overnight we’ve moved into a classic “reversal Thursday” roll, with both products bouncing by a nickel, but already those gains have been halved as it seems there simply isn’t any conviction among buyers in the face of weak fundamentals and technical.

The $2.70s may prove the pivotal range for price action for the rest of the year. If we break lower from here, a significant bear market is likely that should push energy prices to multi-year lows. If support holds again, we will likely move into a more traditional pattern of “sell by May” and rallying later in the summer.

CLICK HERE for a PDF of this morning’s charts

 

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