As we enter the final three hours of trading for the week, we here at TradeWinds think its going to be a crucial period and we are optimistic.
First, its looks like, at least for the short term, the oil rally has run out of gas. We are seeing a divergence set-up for our Fisher Transform and TSI indicators that tell us the USO has hit a near term peak and will be headed down. Watch the trading action for the rest of the day and if it stays down going into the weekend, you can think of taking a short position next week. This would be a take-the-profits-quickly position because of how oil is tied into the political world. Also don't open that position today - you don't want to wake up Monday morning to see that the US has bombed Iran.
We also like the way the small caps have held in there pretty good through this down draft, a bit better than the big boys. This means folks are still willing to take a bit of risk in the market. Watch the afternoon action closely. If we finish strongly along with oil down, it will be a cause for optimism going into the weekend.
Watch for our weekend update to recap the week and look ahead to the next.
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