XOI Oil (XOI)

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Oil closed at 93.84 after trading to 96.84 when we had geopolitical issues. Since then, we heard a reconciliatory comments on geopolitically violent regions. Hope that terrorists do not through bombs to raise oil price.

It traded to 88.89 on 11/13/07, retracing 8.2%, now, it formed a hammer on weekly chart with over-extended 25yr high macd level.

I noted that oil 100 +/- is a significant resistance level, technically and economically. Oil price is a contra-inflation factor as eventually higher oil price lessens consumer demands. I haven't seen a noticeable change in consumer spending habit as we don't see smaller cars on streets. This higher oil price will eventually change consumer behavior as we are going into world economy demanding more oil from other economically fast growing countries such as China.

Having said that, in US, the higher oil price will impact consumer spending and oil trading above 100 is a high risk.

OIL weekly price action shows a "Cup & Handle" formation or a round bottom formation with a low of 53.11 w/e 1/19/07. This is a retest of Jan 2005 breakout for the last two year of oil bull run.

It makes sense oil to pull back from 100 level. Large investors took profit on high speculation as we can see significantly lower long positions on OIL COT chart.