By Matthew Kerkhoff
Oil rebounded toward the end of last week and the strength is continuing into today’s trading. There is a good chance the rally is being driven heavily by short-covering, but the price gains are easing fears across the broader market.
After two months of sharp declines, during which the RSI stayed in oversold territory, oil (WTIC) has risen nearly $10/barrel over the last five trading sessions. That represents an increase of over 20%. The positive action has taken the RSI back to neutral levels and triggered a long-awaited bullish crossover in the MACD.
But more important than the technicals is what the rise in oil is doing to the psyche of investors.
Oil comes with a lot of baggage. For better or worse, its price is widely viewed as an indication of global demand, seemingly regardless of supply factors. When oil declines, it exerts a deflationary drag on the global ... Log in or subscribe to continue reading.