Will Oil Prices Continue to Climb?

June 23, 2021

Mish's Daily

By Mish Schneider


Written by Forrest Crist-Ruiz

Since the lows, in March 2020 the stock market has made a huge rally and has broken to new highs in all the major indices.

Trillions of dollars have been spent to keep the economy in a strong recovery and bullish phase.

This has pushed most sectors beyond price levels before the crash.

Now with over half of the U.S population fully vaccinated, traveling has surged along with gas prices.

However, the U.S Oil Fund ETF (USO) is one sector that never fully recovered.

This could present another investment opportunity if gas prices continue to climb along with its use.

One caveat leans back onto supply chain and scaling disruptions in travel-related industries.

This includes companies such as airlines, car rentals, and new car manufactures that have struggled to increase inventory and find workers in order to keep up with demand.

Consumers have recently seen a large increase in prices which could be off-putting to someone looking to travel or purchase a new vehicle.

Therefore, this could be another hurdle for the oil industry to overcome, though it isn’t a showstopper.

Having said that, by looking at USO’s daily and weekly chart, we can see both the short and long-term uptrend are intact.

Additionally, MarketGauge's Real Motion indicator shows that momentum has broken out and held over its 50-period moving average.

The weekly chart also shows that from a long-term picture USO has a lot more space to grow before reaching pre-pandemic price levels.

If momentum continues to hold in Real Motion, USO and oil-related companies could see another wave of investors jump on the trend.


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ETF Summary

S&P 500 (SPY) 425.46 high to clear.

Russell 2000 (IWM) 221.13 support. 230.95 resistance area.

Dow (DIA) 332.68 support.

Nasdaq (QQQ) 342.80 support.

KRE (Regional Banks) 63.63 support.

SMH (Semiconductors) 245 support. 258.59 resistance.

IYT (Transportation) 254.65 support.

IBB (Biotechnology) Needs to hold 159 level. 163.63 resistance to clear.

XRT (Retail) 96.97 needs to clear and hold.

Junk Bonds (JNK) 109.65 resistance.

XLU (Utilities) Held the 200-DMA at 63.21.

SLV (Silver) Watching 23.84 to hold.

VBK (Small Cap Growth ETF) 288.11 to clear.

UGA (US Gas Fund) 35.70 new support from gap.

TLT (iShares 20+ Year Treasuries) Holding minor support from the 10-DMA at 142.70.

USD (Dollar) Watching to hold the 200-DMA at 91.49.

LIT (Lithium) 70.37 to clear and hold.

DBA (Agriculture) 17.67 support with 18.40 resistance.

GLD (Gold Trust) Like this to hold over 166

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