Media Room

Chartology: Markets and Commodities

April 14, 2011

Press, Technical


Chartology: Markets and Commodities

Tue 12 Apr 11 | 05:20 PM ET

The following transcript has not been checked for accuracy.

welcome back to fast money. was today’s selloff a blip in a long-term bull market or start of a serious correction? only the charts can clearly say. let’s bring in jeff degraff. we’ve got to deal with the oil trade here because what is going on here after this goldman call? well, you know, gold man set up an outside reversal day. i heard someone reference it before. when you’re overbought, you get these outside reversals. your range on the day is greater than the previous day range. in the near term, there isn’t much of an impact. when you go out six, 12 months from now, it actually sets up for a fairly negative call for oil specifically. more interestingly, more for the physical and not as much for the actual energy stocks. but in the near term it doesn’t tend to be that big of a deal. today, there was significant follow through. the question would be, when you have the first day and you get the outside down reversal and then you have follow through selling the following day, does that increase the propensity that maybe a short-term trend is developing to the down side? i would look at it a little bit differently in that what you’ve set up stpa correction in ongoing uptrend. you had it in 2006, you had it in 2005 that led to modest pullbacks in crude but all in the context of tup trend. near term, i’m talking anywhere from 20 to 40 days. when you start looking out 20, 40 days, the physical is generally higher. a lot of people who want to find something wrong with this rally find something persistently in the course of weeks. we’ve done a lot of work on volume and we haven’t been able to find or prove that volume matters. if you take a look at this chart, volume as it relates to its average, running about 15% below average. but uh i’ll also point to 2009, april, may, june of 2009. people were using that as an excuse not to get invested and it was one of the best parts to actually go after the markets. i think people put way too much credence on volume. we just don’t kind it to be nearly as important as wall street teem deems it to be. i talked about the bow tie, you know a lot more about this. if we break the 1305 area, a lot of people say this drops down to 1250. do you agree? i think the important level we’re watching is the 100-day moving average. that’s at about 1280, that was able to serve as support during the last pullback down to about 1256. i think you have to get through that first before there’s really a bigger issue. i’m looking at the market to collect itself and move higher. this is not a moment market. this is a trend market. they’re characterized by three steps forward, one step back. they keep grinding higher that’s exactly it. this is not momentum, this is trend. the right course of action is to use oversold conditions to buy them and i think we’ll have one develop here in the next week and a half, maybe two weeks. let’s talk gdx. they’ve finally started to outperform the physical. we haven’t been able to find any real long-term relationship, but at least you’re getting — you had a breakout here. we came back in a little bit. we haven’t sundays cut any support. very classic of a trend market, not a momentum markets. it will come in, consolidate. but all within the context of the uptrend. and we’re certainly using this consolidation to get exposure there. thank for stopping by. appreciate it. jeff degraff. let’s put our ear to the wall here.

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