Editor's Note: This is an excerpt from today's morning research. Click here to learn more and to subscribe to America's fastest-growing independent research firm.
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Oil experienced an epic 6 month crash, then rally. Right now, the inverse correlation between Oil and the U.S. Dollar is screaming (yes, we know that supply and demand narratives help too…) with USD signaling immediate-term lower-highs and Oil higher-lows into this US jobs report. Bad jobs report = USD bearish, Oil bullish.
Speaking of the Dollar, the Russell 2000 does not like Down Dollar. That makes sense to me as the “tax cut” from lower gas prices is, well, getting cut! This is going to be a problem for an economic narrative that even Janet Yellen has been forced to acknowledge recently (#StrongDollar, Down Oil, Stronger Consumption).
The Russell 2000 in the midst of a -4.7% correction. Overlay that with the USD and you’ll get the point.
As I spelled out in today’s Morning Newsletter, my intermediate-term TREND price deck for Oil is now $42.06-$69.03.