He’s a 10, but he only respects the 200SMA
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I’ve never before seen a chart respect a technical indicator this much. It’s weird that it is an index — a synthetic value, not a real stock — especially given how sensitive oil is to unpredictable geopolitical events.
The symbol is SOLUSBOT (Definition, TradingView), the index that the leveraged ETNs NRGU/NRGD track. It tracks the top 10 oil companies in the US. I am looking at the daily chart.
The journey begins in 2020.
2020
It crosses below the 200SMA in late January. From memory, there were pandemic rumors at that time and there may have also been news from Saudi Arabia.
It crosses above the 200SMA in late November after the downtrend is broken on November 9th. Around that time we got US election results (remember the delay?) and the vaccine was announced. One event meant oil supply will decrease, while the other event meant oil demand will increase.
But, very interesting are the times that it failed to cross. In late February, it tried to cross above the 200SMA but failed and crashed. In mid-June, it tried again to cross the 200SMA, but failed and entered a multi-month downtrend.
Every time SOLUSBOT touches the 200SMA, it either rejects strongly or it has a strong reason behind why it breaks through.
It is almost like it knew it was there.
How weird is that? It’s weirder still, given SOLUSBOT is not traded directly and oil is sensitive to geopolitical events.
2021
The pattern continues.
No breakthroughs happen in 2021. We see several tests of the 200SMA, but with no strong impetus for it to break through it stays above the 200SMA.
Fun fact: inflation might just be a fancy way of saying a commodities bull market. To break this bull market, the Fed twists knobs to decrease demand on commodities. So, of course we saw inflation, commodities were in a bull market. Of course, SOLUSBOT is large cap oil companies, but the correlation with the price of oil is fairly strong (and…
