The market rallied nicely today as oil pulled a double reversal.
After this morning's data, oil rallied back to around $132. But as the chart below shows, it then proceeded to rollover, and finished at its lows for the day.
Not only was this one of the biggest downward reversals for oil in weeks, but the volume in the
oil ETF (USO) was the highest its been, I believe since inception. You can also see that its relative strength line is rolling over, and the
stochastics are coming off of very overbought levels. If this were a stock, I would be predicting lower prices ahead and taking profits.
I have long been harping on the (inverse) relationship between the Yen and the U.S. stock market. Whenever we saw the Yen moving higher (represented above by the Yen etf), it would correspond to a down move in the stock market. So it is a bullish sign to see the FXY consolidate below its 50-day average, and then start to break out of that consolidation to the downside. This is also occurring amid a bounce in the U.S. dollar.
You can see similar price action in the Euro ETF (FXE). This one also broke below its 50-day today, and has left a lower high in the chart above. Relative strength is on the decline, and the stochastics are curling lower after reaching overbought territory.
Away from currencies and commodities, I wanted to highlight the bullish move in Google (GOOG) today. Today's comScore data was bullish for GOOG, as it showed accelerating paid clicks. The action in the stock is also bullish, as GOOG broke above its overhead 50-day average, and reversed last week's weakness. A break above $600 would be even more bullish, and likely usher in a new uptrend.
Last, I wanted to highlight the biotech ETF (XBI), which is breaking out of a consolidation today with a sharp move higher. The ASCO biotech conference starts this weekend, and will likely spark renewed interest into this growth industry.
These stocks are representative of growth stocks, which have fared well lately and continue to move higher even as energy and commodity stocks have moved lower this week. This is a bullish sign of investor rotation toward growth stocks.
long GOOG, XBI
