Why are SNP and Oil topping?

Mukul Pal ·

Since May 2010 Brent Crude Oil has outperformed SNP (Romanian Oil Major) by 15%. The Rieki performance cycle illustrates Brent Crude outperformance against SNP (Fig 2.). Now the Rieki cycle is touching a maximum. This suggests that it is time for a shift in performance polarity and for Brent Crude to underperform SNP (Petrom). Even individually Brent (Fig 1) has topping Rieki performance cycles suggesting that the commodity might pause before pushing up relentlessly ahead.
Technically SNP, the Romanian Oil major is also hitting overbought momentum levels. The RSI seems over reactive and suggests a topping structure for the blue chip.
Even if SNP does not fall, it could still stagnate as it nears multi year resistances at 0.38-0.4 levels. A topping case on SNP is not good for Brent, which should fall in such an eventuality.
Among energy assets, Natural Gas has finally closed it’s short only trending signal and has turned positive. This as we mentioned prior makes a negative case for TGN. BETFI is still below key resistance levels. Our preferred view remains negative, we still need more price positivity to look for a sustained uptrend from current levels. The LOSO trending system is LONG on a very few stocks.
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