Over the weekend, a major Saudi pipeline was attacked, and the futures market opened lower. It's interesting that this is coming right at intermediate resistance... but keep in mind that there's an old expression on Wall Street (originally coined by Nathan Mayer Rothschild about two centuries ago) to "buy on the sound of cannons" (meaning war creates initial panic, but is ultimately bullish).
Of course, no one uses cannons anymore, preferring instead to wage war with drone strikes -- or (in the case of Canada) via the export of Justin Bieber albums, against which only full-scale nuclear retaliation would be appropriate. However, Canada is protected by the fact that it shares a geographical border with the United States, which is what prompted this bold act of aggression on Canada's part in the first place, since nuclear retaliation would render certain places like Wisconsin even less hospitable than they already are. Canada enjoys no such protection against Saudi Arabia, however, so Justin would be wise to remember that.
What were we talking about again?
Oh yeah... Canada.
No! Cannons.
Anyway, on the bull side of the coin, this disruption in the global oil market might give the Fed exactly the excuse they need for another rate cut, which the market was already betting they were going to make before the strike. So that's something for bears to keep in mind.
Chart-wise, nothing much has changed, since the market spent Friday goofing around sideways:
Near-term, I've drawn up a few trend lines to watch in the event the market continues reacting to resistance:
SPX is, as usual, in a similar position to INDU:
In conclusion, the market's in a bit of a no-man's land in terms of prices and pattern: There are now three waves up from last month's low, so if the rally is corrective, this is likely where it would end. On the bull side of the coin, RSI showed strong momentum at the last peak, and usually that's a recipe for at least a retest of that high, if not higher prices. Trade safe.
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