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Unimpressive Recovery in Oil
All of the action off of the June 4 low at 81.21 in nearby NYMEX Oil futures has carved out a sideways congestion or coil-type formation. This is located in the lowest 20% of the entire decline from the $110.55 high back on March 1.
The fact that nearby oil has been unable to recover more than 20% of its decline during a three-week period not only is remarkable, it is also a sign of acute weakness from a commodity that just might be suffering from both overproduction and slackening demand.
Unless and until nearby NYMEX Oil claws its way above 87.00, my work argues for a breakdown that presses prices to new bear phase lows projected into the 79.00-77.00 area next.
ETF traders may want to watch the U.S. Oil Fund ETF (USO).
