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Crude Oil finds itself on a support line that has been very strong for the past four years. As Crude oil has approached or hit this support line the S&P 500 has been at or nears key lows as well. We have to view the above chart in Crude Oil this way…support is support until broken and if Crude rallies, stocks should follow.
One thing I find interesting about this support test, that is a little different this time is this.…the inset chart reflects that over the past few years that Crude has been on support, traders have had a vastly different set of positions than they do now. The way traders are positioned at this time has actually been followed by declines in Crude.
This situation reflects that the test of support by Crude oil MAY NOT BE your average test of support, when looking back over the past four years.