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http://chartingstock.blogspot.com/2009/06/oil-bearish-failed-to-hold-onto-gains.html
Oil Bearish? Failed To Hold Onto Gains After China Announcement Increasing Oil Reserve By 160%-This Is A Bearish Signal
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*Oil Down 5.75% Since June 11, 2009 & Is Down Approximately 3.3% At This Point Today
*Yesterdsay China Announced They Would Increase Their Oil Reserves By 160% Adding 169 Million Barrels Of Oil
*Oil Rallied For One Day Off Of This News But Has Given That Entire Up Move Back
*Link Featuring 3 Oil Analysts Bearish Calls This Morning
*When An Asset Fails To Rally Or Hold Gains After Major Positive News Events It Is A Warning That The Asset Is Likely In Or Entering A Downtrend
Yesterday China announced they would increase their Oil Reserves by 160% adding an additional 169 Million Barrlesof Oil. This news succeeded in assisting Oil in rallying approximately 3.5% yesterday but Oil has given back that entire move today. When an asset fails to rally or fails to hold onto gains after a major "game changing" news it is a warning sign that the asset may be entering or is in a downtrend.
This morning Peter Beutell reiterated his near-intermediate term Bearish call on Oil suggesting that Oil is likely to hit $55/Nymex Barrel by the end of the 3rd Quarter. On June 11 I posted the a note (link below) calling attention to several technical indicators suggesting Oil was likely overbought & included Peter Beutells Bearish call that morning. Since then Oil has fallen approximately 5.75% & while pops higher are possible, keeping in mind the increased probability of a near-intermediate term downtrend in Oil is key.
To View Boris Schlossberg, From GFT Forex, Peter Beutel From Cameron Hanover & Todd Colvin, ofMF Global Bearish Oil Calls This Morning:
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To View The June 11th Post With Technical Analysis & Peter Beutells Bearish Oil Call Please Click Here:
BOTTOM LINE
When a "game changing" event fails to provide a sustained pop higher for an asset it is a warning. While one cannot entirely rule out a continuation of the Oil rally, heeding the warning signals is likely wise.
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