I am excited and delighted by what’s happening with crude oil. As many of you know – particularly my Slope+ subscribers, for whom this has become an obsession – I’ve been very enamored of energy lately. One of the big appeals for me is that unlike so many equity stocks, energy and its related producer stocks seem to be one of the last “honest” markets to trade. It actually – gasp – reflects supply & demand as well as honest-to-God economic realities. It’s certainly refreshing, which is why a full third of my 81 short positions are directly related to energy.

Crude oil was down on Wednesday, but more encouraging, after hours, a new inventory report (which stated that supplies were getting surprisingly bloated) sent it sinking further. In addition, there has been a very reliable resistance level which, thank God, was rejected again yesterday:

I’ve been griping about February a lot, and one of the reasons is that crude’s consistent demise in January made the preceding month so delightful. In February, we’ve painted out a trio of rejected highs and a corresponding trio of higher lows. What I want to see happen is for the middle low (that is, 48.96 that took place on February 11th) to get taken out, which will break this modest uptrend.

Suffice it to say I remain enthusiastically short energy.