We examined the relationship between the NYSE Oil & Gas Index (INDEXNYSEGIS: XOI) and the overall market to determine whether the S&P 500 index (INDEXSP:.INX) can influence a stock’s future move.
In those days, we also discussed the relationship between oil stocks and crude oil:
Oil prices have remained in a narrow range, but yesterday they rose above $95 a barrel. What’s fascinating is that the XOI expanded marginally over a significant obstruction at the same time. This positive relationship may just be another short-term anomaly – especially when we look at the week-by-week perspective.
” Though they moved in a similar direction after quite a while of a negative relationship, this positive connection is just one more brief singularity to take into account.”
Taking into account the above-mentioned factors, we decided to talk about their relationship. The diagram below should be examined.
Crude Oil Chart From a Current Perspective
The first seven days of another month and another quarter in crude oil, according to the current perspective, were very important for oil bulls. The price dropped below the August low and the 38.2% Fibonacci retracement level.
A week-by-week high of $104.38 was reached as purchasers didn’t surrender and halted further decreases. Light unrefined acquired 0.87% last week and closed higher for the first time in quite some time. Oil bulls stopped merchants and protected the 38.2% Fibonacci retracement level recently, resulting in a pullback to more than $104.
What’s more, What happened to the oil stocks at the same time? For five weeks, they closed lower without precedent. Does this mean they become more fragile when exposed to crude petroleum? What is the connection between light unrefined oil and oil stocks?
What about the NYSE ARCA Oil Index (INDEXNYSEGIS: XOI)?
We will attempt to respond to these inquiries as soon as possible. Here’s a diagram of the NYSE ARCA Oil Index (INDEXNYSEGIS: XOI) to observe the current situation in the oil financial market. The graph shows light rough month-to-month (from stockcharts.com).
The XOI broke over the July top, but it also broke over the high from May 2011. It will be the highest month-to-month close since June 2008 if the purchasers hold the oil list over 1,400 today.
The XOI could not rise above 1,400 despite efforts by oil bulls. This was the highest month-to-month close since April 2011. A breakout has not been discredited, and the XOI is above the long-term declining resistance line. Oil is also included in the rising pattern channel. On the basis of these perceptions, we still see a bullish situation.
XOI is Still Near the Top of May
The XOI is still near its May top… we should carefully monitor the oil index. There is a potential for oil bears to go short if the obstruction level is close to being broken. A total of 1,400 people will be able to receive immediate help in this case.
The XOI fell to a week-after-week low of 1,394 in the last week as a result of such value activity. It should be noted, though, that this weakening was only temporary, as the oil stock file remained closed by over 1,400 points all week long.
The circumstances have crumbled since this week began, despite the bounce back. Stocks of oil fell under 1,400 and approached the medium-term support line (set apart in the dark), the lower boundary of the rising wedge. Even so, the medium-term upturn isn’t in jeopardy.
Let’s Focus on the Connection Between Light Crude and Oil Stocks for Now.
Taking a look at the above outlines and comparing the value activity in the two cases, it appears that oil stocks were more vulnerable because they closed lower for the first time in some time. While light rough closed higher for the first time in quite a while, we can see that the shortfall in oil stocks was just shallow when we investigate the circumstances of both cases.
Despite the new decays, they remain above the medium-term support line. At the same time, crude oil is trading below its medium-term rising help/obstruction line.