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Takeaway: That 5% pop in WTI yesterday? It doesn't change our view that crude prices are headed lower.

Ignore the Pop: Oil Is Headed Lower - oil cartoon 03.29.2016

Wondering what to do after yesterday's big oil bounce? Below is some brief analysis and our updated risk ranges via Hedgeye CEO Keith McCullough in a note sent to subscribers today:

"No follow through to the +5.1% WTI day as the pop in this inverse correlation trade runs into resistance; immediate-term risk range for WTI is now $35.04-40.25 (top end of the range used to be closer to $42-43); we’ll be hosting our Q2 Macro Themes Call at 11AM EST"

On The Macro Show, McCullough added:

"As you can see in the chart [above], oil is starting to signal a series of lower highs. Oil would have to break out above $46 to get through our Tail risk level. The immediate term risk range is back down [$35.04-40.25]. So nevermind going to $46. It doesn't look like oil can get to $42 or $43, which used to be the top end of the immediate-term risk range.

 

That's important because US equity markets are hooked what? Other than the biotech charts yesterday, yes, markets are hooked on reflation and dollar down. Everything that Europe and Japan tried and is now failing."

 

Yes, that's how we think the movie ends.