On Friday morning well before the markets opened, I posted a report highlighting the recent relative strength of crude oil vs. gold. At the end of the trading week, I observed that the volatility index for crude oil ($OVX) has broken a solid level of support (see Chart # 1 below).
Prior to this, the weekly chart for $OVX demonstrates that it had successfully tested support at least six times. This time it was different as the index broke down to unprecedented lows since its inception.
Sustainable weakness in $OVX index is worth monitoring for further clues on the market direction for crude oil prices. During the past trading week, oil was up +9.37% vs. gold being up +0.33%. While gold has significantly outperformed oil since late September, we could be witnessing a change in the relative performance trend between these two commodity assets.
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