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“These are the days that must happen to you.” – Walt Whitman
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After opening right near their highs of the day and reversing lower throughout the trading day yesterday, equity futures are staring at a weak open this morning. Treasury yields are lower along with crude oil even as the debt ceiling deal moved out of Committee and is set for a full vote. Investors will be watching the Chicago PMI and JOLTS reports later this morning, but overnight, we had some weak economic data out of China and lower-than-expected inflation data out of Germany where the y/y increase in CPI dropped to 6.1% which was actually the lowest reading since last March. Some of these tech stocks have had a huge run in the last several days/weeks, so a pause should surprise no one.
The last 12 months haven’t been the best of times for crude oil, and the last two days have been no different. After a decline of nearly 4.5% to kick off the week yesterday, WTI is trading down over 2.5% this morning putting it within $1 of a 52-week low. A year ago, prices were coming off a peak of just over $130 per barrel after Russia invaded Ukraine but were still firmly in triple-digit territory. Bulls made another attempt to run crude back near the March 2022 high but came up short, and things only got worse from there. Since then, it’s been a steady march lower, and the price of a barrel of crude has nearly been cut in half.
For crude oil bulls, the last two months specifically have been a major disappointment especially when you consider the fact that China’s reopening was supposed to be a major catalyst. First, on 4/2, OPEC announced a surprise production cut. While the news caused a brief spike in prices, the rally stalled out right at the 200-day moving average (DMA) and prices were back at 52-week lows in a month. Then last week, a Saudi minister publicly noted that oil speculators who were betting against crude oil should ‘watch out’. In a bull market, those comments would have caused a buying frenzy, but in a bear market, jawboning has a very short half-life, and it wasn’t even enough to get WTI back above its 50-day moving average.
With crude failing its attempt to break above the 200-DMA back in April, the extended streak of closes below the 200-DMA has extended further. At 190 trading days through today, the current streak is the longest since the 427 trading day streak ending in April 2016. It would take nearly another year to challenge that streak, but the current streak already ranks as the fifth longest since 1984. Not only that but if the current streak lasts another month, it will move into third place overall.
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