Trader's Daily Notebook: A Bloodbath for Oil

The low-volume decline in the E-Mini S&P 500 futures (Es) has reached five consecutive sessions, but that wasn't Wednesday's headline event. Wednesday's auction was about oil, and the Energy Information Administration's (EIA) weekly report showing a massive, 8.2 million barrel increase in domestic supplies. Shortly after EIA's report hit the tape, traders hammered crude oil futures back toward $50. Of the day's 20 worst-performing S&P 500 stocks, 17 were in the oil patch. All in all, it wasn't a good day for traders trying to be long crude ahead of the higher timeframe $55 breakout. 

Weekly Light Crude Oil Futures
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As you'll recall, we devoted a bit of time in last Thursday and Friday's Trader's Daily Notebooks to discussing why the most logical place to get long crude is above $55. If my analysis made sense to you, I hope it helped you avoid Wednesday's bloodshed. If not, I trust you had proper risk measures in place. Regardless, I wouldn't change my outlook one bit. If crude closes a weekly bar above $55, it's probably still worth serious consideration among intermediate timeframe traders. If a weekly close above $55 isn't in the cards, perhaps we're only a few weeks or months away from testing the other side of the $10 channel. ...476 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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