3 Charts: Oil At Buy Point, NASDAQ Bearish Divergences Developing
Declan Fallon | Jan 25, 2015 11:52PM ET
A bit of a hodgepodge of charts to review. I'll start with my favourite of the bunch: the relationship between oil and gold prices. Peaks in the relative price between these commodities have historically provided swing lows for commodities - oil in particular. Certainly, sufficient time has passed between peaks to mark a major low.
The relationship between NASDAQ Highs and Lows doesn't suggest we have reached any major inflection yet. Ideally, NASDAQ Lows should spike above 100 to mark a major low, with 200+ for 'back up the truck' style low.
NASDAQ breadth is also stronger than where historic sell-offs typically occur, although developing bearish divergences have much in common with those in 2007. Maybe the second half of the year will deliver the ultimate peak for the 2009-15 advance(?).
With the exception of the gold:oil relationship, the other charts are long term plays that have some way to go. In the meantime, oil looks to has reached a 'buy' point for those willing to grab the nettles.
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