Today stock market was influenced by new home sales and EIA petroleum status report. Oil supply reached 6th week high that lubricates the market move to the down side. Crude oil inventory change 1.3 million barrel to 9.4 million barrel. Oil Inventory reached new record to 532 million barrel this week. This is 7 percent up from the same period on the last year. That a big shock for the market. Even though Gasoline inventory reserve went down this week from -.7 million barrels to -4.6 million barrels, Distillates reserve still up for the week. Table shows the actual data:
|EIA Petroleum Status Report|
New home sales was within the range of expectation. New home sales expectation was 489k to 530k and original figure was 512k. Home sale of west was up 39 percent as was expected.
Oil broad index USO is down 4 percent for the day. That is bad news for the oil sector because single event causing 4 percent correction is not good for new uptrend of the oil. This is clear indication that investor has very little confidence on the oil bullish movement. Another point is USO also failed to break 100 day moving average. As USO hits 100 day moving average, ETF started to slide down. This is like a dead cat bounce for the OIL, especially today’s 4 percent price down of USO warns investor’s possible dead cat bounce for the oil. Only hope is USO is right now in the very thin support line. Next week we will see is it support or real dead cat bounce.
XLE is also down more than 2 percent. It seems ETF is trying to get support on its 100 day moving average. XLE now has 40 stocks component of S&P 500 index that is 1/12 of s&p 500 index. XLE slides down has direct impact on the s&p 500 index down ward movement. If oil slide down continuously, XLE may follow the USO and come down to 50 day moving average for support.
Dow Jones index:
Oil reserve report has negative impact on the Dow Jones index. Dow index is down .5 percent for the day. Dow is also on the big resistance zone. Dow needs some strong good news to break 17500 to 18000 zone. Dow was in this this almost one year including 2 correction. This zone will determine whether we are going toward another new high or another move down or pull back is on the way.
S&P 500 is the leading index on this bullish move. S&P 500 first crossed negative range of the year. S&P 500 is also down more than .5 percent. Index is still lying its long run resistance zone. This is good news for the index. Now we have to see how much its moves down before it make next move towards the new high. S&P 500 seems to heading to the 200 day moving average and longtime resistance line that is now a support zone for the index.
QQQ, technology ETF, is down also 1 percent. This ETF looks really weak. QQQ pull back from the point where 100day and 200 day moving average crossed each other. This is critical point for technical analysis. However, ETF failed to cross this point and closed above that point. Today’s one percent move down further indicates the ETF weakness and downside move is more probable. QQQ next support level 104 to 102. We have to see how ETF played around this level.