Indicators Worth Watching: Oil Appears Oversold (For Now)

Includes: DUG, OIL, USO
by: Andrew Horowitz

There have been several warning signs over the past few weeks that now were obviously a “tell” for the coming direction of equities. (Hindsight is 20/20, of course.)

Much of the action can be blamed on the sovereign debt concerns and the U.S. dollar’s rocket, causing short covering of carry-trades. There was even talk of a hedge fund (or hedge funds) collapsing and selling off due to panic selling to cover shorts.

Oil may be oversold and bounced nicely off of $70 and the U.S. dollar has to push through hard resistance from here. Next week’s revelations about Europe’s decision to support Greece (and the PIIGS) will dictate market direction.

High Yield bonds may have hit a wall here as downgrades are starting to appear across fixed income sectors.

(Click on each chart to enlarge)


Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the date published.