OUTLOOK: Price Signal Summary - Bull Cycle In Oil Futures Intact

• The NFIB small business optimism index surprised in November with a sharp 8pt increase to 101.7 (cons 95.3) after 93.7 for its highest since Jun 2021.
• It follows 34 months remaining below the 50-year average of 98.
• Press release: “Of the 10 Optimism Index components, nine increased, none decreased, and one was unchanged. Following last month’s record high of 110, the Uncertainty Index declined 12 points in November to 98.”
• “The election results signal a major shift in economic policy, leading to a surge in optimism among small business owners. Main Street also became more certain about future business conditions following the election, breaking a nearly three-year streak of record high uncertainty. Owners are particularly hopeful for tax and regulation policies that favor strong economic growth as well as relief from inflationary pressures. In addition, small business owners are eager to expand their operations.”
• We note though that the uncertainty index is still historically high.
• Despite the surge in optimism, the share expecting to increase prices over the next three months only saw a modest uptick to 28% (+2pt). It’s technically the highest since May and a little further away from the 21-22% readings seen pre-pandemic, but is still low by post-pandemic years standards.

• RES 4: 112-18   50.0% retracement of the Sep 11 - Nov 15 bear leg 
• RES 3: 112-02   Low Oct 14  
• RES 2: 111-24   38.2% retracement of the Sep 11 - Nov 15 bear leg  
• RES 1: 111-20+ High Dec 6 
• PRICE:‌‌ 111-01 @ 11:06 GMT Dec 10
• SUP 1: 110-18   Low Dec 4       
• SUP 2: 110-01/109-20 Low Nov 25 / Low Nov 20/21 
• SUP 3: 109-02+ Low Nov 15 and the bear trigger    
• SUP 4: 108-28   1.236 proj of the Oct 1 - 14 - 16 price swing

A bull cycle in Treasuries remains in play and recent gains reinforce the current bullish condition. The contract has traded through the 50-day EMA, at 111-12. Price has pulled back, however, a clear break of the average would strengthen a bullish theme and signal scope for a stronger recovery. Sights are on 111-24 next, a Fibonacci retracement. For bears, a reversal lower would signal the end of the bull cycle and open 109-02+, Nov 15 low.

OI points to a mix of net short setting (TU & FV) and long cover (TY, UXY, US & WN) during Monday’s weakness.

• The long cover seen further out the curve provided the most notable positioning move (in DV01 equivalent terms) on the day, coming after long setting was seen across the curve on Friday.
• Note that DV01 equivalent positioning swings in individual contracts were relatively modest.