Commodities Break Channel
Tim Knight | Nov 24, 2018 11:49PM ET
Crude oil has been getting absolutely walloped for weeks now, having lost over a third of its value recently. Looking at the chart of USO (NYSE:USO) below, it seems to me we are definitely primed for a bounce. The bounce will ultimately fail, but we’re really, really oversold at this point.
Of course, any ETF that has anything to do with energy has been benefiting (or getting harmed) by this same move. The triple-bullish on oil/gas explorers, symbol Direxion Daily S&P Oil & Gas Exp & Prod Bull 3X Shares (NYSE:GUSH), has cracked its own trendline and has lost nearly 70% of its value in less than two months.
One thing I noticed is that the commodity ETF, symbol PowerShares DB Commodity Tracking (NYSE:DBC), has actually cracked the channel which has been in place for years. Like I said above, I think oil will bounce, but I wouldn’t be surprised to see DBC hit resistance in the form of that now-broken channel.
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