From the desk of Steve Strazza @Sstrazza
Our Top 10 report was just published. In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.
Energy Futures Turn On The Heat
Crude Oil broke above resistance at its 2019 highs back in June and has been grinding higher ever since despite its energy-related peers remaining beneath their corresponding resistance levels. That changed this week as Heating Oil and Gasoline finally broke out to new multi-year highs. The recent strength from this group comes as base metals continue to correct through time and price. This kind of rotation within the commodities complex is constructive, especially after such a strong run-up off last year’s lows. We think Energy is offering some excellent risk/reward opportunities right now as we’re not only seeing other commodities contracts confirm the price action in Crude, but Energy stocks are also breaking out to new highs (see Chart #5).
As for Gasoline, we want to be buyers of this 6-year base breakout with a 3-6 month target of 3.13 and stop at the former highs around 2.18. Heating Oil broke out of a similar base but still faces some overhead supply at the 2018 highs, thus the risk/reward is not as favorable. Regardless, the bias is higher if we’re above 2.12 and we’re looking for upside toward 2.45 over the near-term.
