A Dip in Oil Pricing Provided a Bullish Opportunity 

Tom Gentile

Posted in
Technical Analysis

By: Tom Gentile
March 21st, 2022

3 mins read

The Markets had its Best Performing Week Sine 2020 Last Week

Post the Fed announcement on short-term interest rates and Chairman Powell’s subsequent commentary on what they see on the horizon for future rate hikes, the market had a bullish week.

The talk Powell gave was deemed one with a Hawkish tone.  Indicating the Fed will likely be more aggressive and assertive with their monetary policy depending on what happened with inflation.

The Fed Approach in Clearer Focus

Basically, the Fed make it clear they could hike faster and by a greater amount.  And by the Fed I am talking about Chairman Powell.

Today at 12:30pm US ET, Powell stated inflation jeopardizes the recovery of our economy and vowed to fight inflation to control the risks of inflation.

He said they may start raising rates 50-basis points vs the 25-basis point hike they did recently for the first time in over three years.

Despite Today’s Market Sell-Off, Oil has Continued its Upswing

Immediately the markets took the statement of Powell’s statement that 50-basis point rate hikes are on the table if needed as a reason to start selling off again.

Despite the decline in equities, the oil and energy sector maintained its strength, trading up 7%.

The European Union is split on its decision on whether to join the U.S. in an oil embargo against Russia, plus there was a recent attack on Saudi Aramco facilities.

Even with the upswing in oil prices know that things have been and can get volatile again.

In article on CNBC.com Daniel Pickering,  chief investment officer of Pickering Energy Partners pointed out ‘we went from $90 to $130 per barrel in a month. We went from $125 to $95 in a week, and that is going to be the normal type of volatility. $10 a week is nothing, 10% moves nothing.”

Technical Analysis Today: Fibonacci Chart View on USO

If you look at the 150-day candlestick chart with a Fibonacci Retracement Tool from my online options analytical software called Tom’s Tools, (www.tomsoptiontools.com) you will see the 38.2% fib retracement level held as a support.

It bounced higher off that support and has traded up towards its highs formed earlier this month.

Candlestick Chart 03 21 22

Option Opportunity in the Oil Sector

An example of a stock in oil that shows where some bullish option activity persist is from my Morning Reports Lists from my app Toms Option Tools.  It is Occidental Petroleum Corporation.

Charts 03 21 22

App: Toms Option Tools

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