We've been patiently waiting for meaningful price action in crude oil, but the market has yet to deliver. Nonetheless, crude rarely stays boring for long; this market is well overdue for some excitement.
In our opinion, the nearly non-existent volatility has enabled stop loss order to accumulate on both sides of the market. However, our models suggest the odds favor a running of the sell stop orders. If we are right, the election of stops which are likely placed under $85.00 per barrel, could lead to a water-shed move into the mid-to-high $70.00s.
Seasonals suggest that such a flush would be an opportunity for the bulls. If we are wrong about the initial price break to the downside, the bulls will need to see prices trade above $90 to get the volatility moving in the other direction.
Market: Soybeans, ECL_f, GCL, CL
Range: Stagnant trade has likely enabled stop order accumulation below $85.00, if these orders are elected, stop running could quickly bring prices into mid-to-high $70s.