Coach Mark here.

Oil is perhaps my favorite trading product. As a cash flow trader, I am drawn to oil’s higher than average volatility combined with the ability to consolidate for long periods of time. This combination can lead to long periods of generous cash flow returns and opportunities to play many a support bounce along the way. At least that has been the case for the last decade or so.

Along the way I have played oil primarily from the bullish side when the opportunities arose. When deeper selloffs occurred, I looked for opportunities to add or create new plays in the last eight years and I would often joke “OPEC has your back.” This referred to their willingness to adjust the supply side of the equation to balance the market and put in floors in oil. It has been something that you could consistently count on.

Well, OPEC might not have your back any longer. In their meeting this weekend, their communication appeared to focus more on capturing market share and appeasing members that are not as happy with the prolonged extension of cuts. This is a significant game changer.

As oil sits on the 50-monthly moving average, a break of it would leave oil without any structural moving average support. In the Hard 14 class tonight, I will talk about the importance of structural moving average support in stocks, gold, Bitcoin, and oil. These price levels are critically important and watching for breaks of them has led to many a fantastic trade.

OPEC might not have your back any longer. That is fine. Makes me very interested in the next retracement into falling moving averages. As a trader I have the flexibility of playing any side that I want.

Have a fantastic Wednesday.

Crude Oil Futures (/CL)

Not a good look for oil. The 50-monthly is in a “must hold” formation and previous times it has broken has led to significant selling.

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