Light crude oil futures continue to torture bears following last Sunday's OPEC meeting in Doha, Qatar, with the June contract closing Wednesday's session at its highest level since early December 2015.
While I realize many traders question, and want to fade, the current strength in crude, I'd encourage you to use the eight-day exponential moving average (EMA) as your guide, in conjunction with some simple support and resistance zones. As long as the price is closing above the eight-day EMA and roughly $41 to $41.25, the path of least resistance is likely higher, toward $45 and then $48.
The Market Vectors Gold Miners ETF (GDX) came under serious pressure late in the day on Wednesday, but other stocks related to industrial metals held their ground a bit better. Names like Alcoa (AA), BHP Billiton (BHP), Freeport-McMoRan (FCX) and Teck Resources (TCK) saw small to moderate declines in their share prices toward the end of the session. But the declines were nothing like what the gold and silver miners experienced.
The bottom line is that basic-materials stocks, primarily those involved in the precious metals, steel and industrial metals, have enjoyed massive gains over a relatively short period of time. While I'm not the slightest bit convinced the longer-term trend in these areas has been broken, it's probably fair to assume they've got further to pull back in the short and intermediate term.
A reader asked for an updated on FireEye (FEYE) and whether or not I still thought the stock had a chance at breaking higher. The good news is, I do still believe there is a chance. The bad news, however, is that I really don't want to buy this stock on weakness. Put another way, I like it on strength above $18 to $18.50. For reference purposes, traders involved in the name may want to note that the stock's year-to-date volume weighted average price (VWAP) currently sits near $16.20.
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at firstname.lastname@example.org or posted to my twitter feed @ByrneRWS.