Last week I harped away about gasoline and it finally fell in the last few days. Notice it fell right to the uptrend line. Now it should be obvious for even casual chart readers to see that if this line breaks, it changes the energy picture in a big way.
As an aside, last week we looked at July gasoline and this week the open interest is heavier in August, so that's the contract I am using. Let's call it a break of $3.50 on August gas that would change the picture.
There is another chart that has a solid uptrend line that is fast approaching. Usually we look at the yield on the 10 Year Note, but today I want to highlight the yield on the 30 year. I don't typically focus on the 30-year Treasury, but my Twitter feed was filled with charts of mortgage rates for a 30-year mortgage on Wednesday, so I decided to have a gander.
My gosh, the uptrend line looks so similar to that of gas, doesn't it? Even the shape of the chart is similar after the initial spike in gas in early March, the pattern is almost lock-step.
Early last week we saw the Daily Sentiment Index (DSI) for bonds down in single digits and since then bonds have rallied (yields have fallen). Using this 30-year interest rate chart, I see support at 3.2%. the first trip down there should bounce (Of course I said the same thing about Exxon and was wrong!). Should 3.2% break I think it is a big deal.
I must admit, I am unsure who is the leader of these two charts. Are rates leading gas or is gas leading rates? All I know is right now they seem to be two charts we should all have on our screens. If one breaks the other shouldn't be far behind.
Then there is the chart of ARK Innovation exchange-traded fund (ARKK) . Remember when you couldn't go 10 minutes without someone quoting this ticker? When was the last time you saw anyone fuss over it? Maybe because it has essentially gone sideways for six weeks.
What has caught my eye is that the June decline did not see ARKK make a lower low. Is that why no one is fussing anymore? I grant you it hasn't made a higher high so this may just be a sideways respite, but when a stock everyone quoted almost hourly becomes something they have taken off their screens I think it's time to put it back on your screen.
Finally there are the transports. In the last week or so, crude oil has come down about $15, or 13%, so why haven't the transports even rallied a little bit?
Are they responding more to recession fears than energy costs? Whatever it is, their action is concerning.