This Is Where I Expect Oil To Trade

  • December 7, 2004
  • Mark Melin


Monday Recap: We
wondered out loud if the cash Dow had reached a near term top, and we went on to
mention 10550 support.  In fact, the cash Dow started the day lower, tested
support, then moved higher, then lower again to end the day down some 45 points,
closing just below 10550.  NYSE up/down
volume was more than 2 to 1 negative on a rather light 1.05 billion traded.


The oil
marketing has been helping propel the stock market.  While oil may have more
room to the downside and will likely stay at the $40 level in December,
ultimately I don’t expect to see a sustained move to $30 oil.  In fact, we could
once again see $50 oil in 2005 before we see a sustained move into $30. 


One of the
paradoxes of the market we could see in 2005 could be rising oil and rising
interest rates.  In the short term we could see Interest rates decline slightly,
but this is just a temporary respite, and I wouldn’t be surprised to see a
continued move higher in interest rates and lower prices for the ten year note..


Prediction for
Tuesday:  We could see a move higher at the open, but ultimately I wouldn’t be
surprised to see a move lower at some point and test support.  On the downside,
I’ll first watch the 10500 level, then a potential test of the 20-day EMA at
10460, which could provide a major buying opportunity.  On the upside I’ll watch
for a test of the 10580 and 10600 level.  After this I’ll watch for a test of
the upper Bollinger band.  If we can bust past the upper Bollinger band intraday,
that would indicate strength, as would a close over 10600. 

Mark Melin