Is this WTI’s generational low or not?
Some investors are betting that this is WTI’s generational low but I think not (unless the next QE program is about to begin).
- For two months, WTI could not close below 33.84.
- Candlesticks of this type with two long ‘tails’ that ultimately defeated bears are associated with turning points.
- Note that the last time WTI bottomed back in late 2008, the candlesticks were somewhat similar.
- Taking a level out of the last bottom, the next possible resistance is 39.03.
BUT before you go all in, do note how it is different this time. Everything looks good from the candlesticks, price point of view until you overlay Dow Jones Industrial Average (and the Fed’s rhetoric) into the picture.
- The previous time WTI was this low, stocks were equally cheap but this time there is a huge divergence.
- Late November 2008 the Federal Reserve started QE 1 whereas it is supposed to hike rates this time.