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Crude oil has continued to fight its way higher, and it’s become dangerously close to violating an important resistance level. I want to emphasize “close to,” since it hasn’t done it yet, but it still merits close monitoring.

The reason I say this is because my entire basis for being disposed to bearishness on energy stocks is predicated on the right triangle top. This has been a reliable top, long-term, for crude oil for many years, and frankly it needs to weaken immediately for things to stay squeaky clean.

In contrast to this, heating oil, the only chart I’ve ever seen which actually follows a sinewave, is still shaping up nicely as a long-term long position. I don’t know enough about the energy markets to know if weak crude and strong heating oil is a contradiction, but that’s what the charts suggest.

In any case, just as crude oil is close (but not above) its point of violation, likewise the ETF symbol XOP is in the same situation. On the one hand, it’s a beautiful topping pattern, and yet on the other, it wouldn’t take much more strength to spoil the prospects for this setup.

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