Oil Finds Support At Master Level

As oil fell sharply, the markets followed. Demand destruction fears, a Goldman Sachs bearish call and a disaster in Japan surely to rock their economy for years were all culprits. Speculators fled with arms flailing in the air, trying not to get clipped on the way. As oil retreated to the $105 range, it found some support. The United States Oil Fund LP USO hit a low of $42.17 which was a master retrace on the charts to the pre breakout levels. It also perfectly matched up with the daily 20 moving average. As oil stabilized today, so did the markets. The markets are tied to oil in an amazing way since much of the Dow Jones Industrial Average and S&P 500 are made up of energy stocks. If energy is rising, energy stocks will rise as well, thus the markets have a bid. Over the last two days, energy prices have fallen, thus energy stocks have fallen and the markets have collapsed. Many retail investors have no clue about this and think higher energy prices would hurt the markets. That is not necessarily true and with energy falling today, it is clearly seen. Some key oil movers today hitting solid support levels are Schlumberger Limited. SLB, Peabody Energy Corporation BTU and ConocoPhillips COP. As oil hits support, so are these key oil companies. There may be a rubber-band small bounce on oil coming tomorrow. Watch closely, the charts are telling us it is a solid possibility. Gareth Soloway InTheMoneyStocks.com