Brent Crude – Breakout or Geopolitical Trap?

Sometimes markets just refuse to do what you think they are going to do.

Constantly commenting on every twist and turn the markets make is always going to end with egg on your face at some point.

The rotation in markets is leading to some wild moves beneath the surface, but, in general, markets have been stronger than I expected over the past few weeks.

Solid earnings from the banks and large resources have seen the largest stocks on the ASX flying higher.

That’s holding up the index.

If we see a monthly buy pivot confirmed at the end of February in the ASX 200, it will increase the odds of further upside.

The ASX 200 will have to fall by 2% over the next week to keep the short-term picture bearish.

Meanwhile, Oil prices look primed for more upside, but the geopolitical wildcard could be muddying the waters.

A strict reading of the charts suggests that the odds of a 20% rally in Brent crude towards US$83 are increasing.

But if a deal is done and the tension subsides, there’s a chance this spike becomes a bull trap.

I explain the set-up in detail for you in the video below.

Charlie and I also consider the ongoing collapse in all things software, and I explain why it’s not yet time to catch the falling knife.

Many of the major software stocks on the ASX with solid franchises are currently trending down towards major buy zones, but they haven’t reached them yet.

In other words, they’re in no man’s land.

If you step up and buy them now, you will have to be prepared for months of being underwater if the sell-off continues.

I would prefer to wait for the dust to settle and then see signs of positive momentum before jumping on.

I show you four of the major ASX software stocks to give you a sense of where the opportunities may pop up in future.

We also look at gold and silver, which are seeing wild daily swings.

When you look at the long-term chart of gold, it becomes clear that the sharp sell-off hasn’t damaged the strength of the uptrend by much.

If you enjoy this week’s instalment of Closing Bell, be sure to give us a ‘like’ on YouTube.