May I have this dance?

Recap: In our previous article, we deliberated on the potential occurrence of a retracement in numerous distressed stocks that faced challenges during the inaugural week of January. These stocks pertained to the Technology, Cyclical, and Real Estate sectors, all of which encountered a tumultuous commencement to the year 2024. Unexpectedly, the retracement manifested with notable vigor within a single day. As the adage goes, "Teamwork makes the dream work," this sentiment accurately encapsulates the collaborative market dynamics witnessed yesterday. A salient observation gleaned from the events is the resilience and robustness of the bull cohort, affirming its enduring presence and strength.

January 8, 2024 Top Daily Sector Performance:

-Technology 2.75%

-Communication Services 1.81%

-Consumer Cyclical 1.57%

-Real Estate 1.48%

The concept of retracement was grounded in the observation of a developing head and shoulders pattern for the SPY (S&P 500). As previously indicated, our expectation was for this pattern to unfold around Thursday, coinciding with the release of the Consumer Price Index (CPI) report, which we regarded as the upcoming significant catalyst for the market—using the term "significant" relatively. Surprisingly, the market exhibited notable efficiency, completing the entire retracement by the close of trading yesterday. Instead of tempting fate, we prudently opted to realize gains and strategically reallocate funds into assets that underperformed on Monday.

 January 8, 2024 Worst Daily Sector Performance:

-Energy (1.2%)

-Basic Materials 0.47%

-Industrials 0.64%

USOIL is demonstrating resilience as this trading day commences, exhibiting an approximately 2% increase at the current juncture. In contrast, during yesterday's surge in technology stocks, USOIL experienced a decline of nearly 5% at its daily low points. Although it concluded the day above that threshold, it positioned itself toward the lower bounds of the daily trading range. On "X," we proactively identified and communicated this weakness, presenting an opportunity for those inclined to capitalize on the dip.

The designation of today as 'Tango Tuesday' stems from our distinctive approach to market dynamics. While conventional wisdom may instill fear of bearish participants, our strategy involves an embrace of a different paradigm—a dance, to be precise, and in particular, the Tango.

The bears exerted pressure on USOIL, and we strategically seized the opportunity presented by their actions. The accompanying chart illustrates the early morning strength and the subsequent rebound within the established channel. For our audience engaged in futures trading, the initial target resides at the channel's upper boundary, currently situated in the range of $74-$74.50 per barrel. Technically, this marks the midline, with an upper segment of the channel not visible on the provided chart. Depending on the price's response at the first target, we will furnish a subsequent analysis for a potential move toward the upper boundary of the next channel line. Presently, our attention is directed towards the $74.50 per barrel level.

For our colleagues in the equity realm, we offer an analogous chart featuring Weatherford International ($WFRD), which we anticipate should exhibit an upward trajectory aligned with OIL futures. As illustrated in the daily chart analysis provided below, the observed 'hammer' candle is notably robust, representing one of the most formidable instances we have encountered on a chart. The candle's wick alone spans approximately 5% in length, and discerning investors seized the opportunity presented by this substantial market dip. At Bankfluence, we assert that the exhibited strength is unprecedented in our experience, outside of instances typically associated with earnings announcements—though it is pertinent to note that such a scenario does not apply in this context.

In line with our objective in the OIL market, our attention is directed towards the upper boundary of the established channel for WFRD. The targeted range is situated at approximately $102-$104 per share. The premise underlying this focus is contingent upon the sustained strength exhibited by OIL, as a robust performance in the commodity is anticipated to precipitate a correlated ascent in numerous Oil and Gas (O&G) equities.

*Por Una Cabeza by Carlos Gardel starts playing*