This could be an expensive week for consumers.

The price of oil rallied going into Memorial Day. It rallied again going into Independence Day. That inconvenient coincidence helped push gas prices higher and gouge anyone looking to drive over this summer’s holiday weekends.

There’s one big summertime holiday left this year. And by the look of the chart, oil seems to be setting up for another rally as we head into Labor Day.

Take a look at this chart of West Texas Intermediate Crude Oil (WTIC)…

The price of oil has pulled all the way back to where it was trading just before the Independence Day ramp-up. This is a logical area for the price to find support and attempt to bounce.

Most of the technical indicators are in oversold territory. In fact, they’re just about as oversold as they were heading into Independence Day. This should help to limit the potential downside from here.

Oversold conditions can get more oversold. But the proverbial rubber band is already stretched quite far to the downside. So, it looks to me like the odds favor a bounce.

There’s enough energy built up in this chart to fuel a rally in oil back up to the $72 level. That would match the price just before Memorial Day. A stronger rally could get the gooey black stuff back up to the Independence Day high of $74.

After that, though, all bets are off. Oil sold off hard following the previous two summertime holidays this year. If we get a solid bounce in the price of oil over the next two weeks, we’ll probably get a similar selloff after Labor Day.

For now, though, oil looks to me like it’s setting up for a bounce. So, if you’re looking to fill up your gas tank before the holiday, you ought to do it sooner rather than later.

Best regards and good trading,

Jeff Clark

Reader Mailbag

Today in the mailbag, yet more kind words in response to last week‘s essay, “’I’m Benito’”…

Hi Jeff, I’m sure that like most of your readers, I follow you to gain insight into the markets and see your perspective. Virtually every single piece you put out is geared towards that end, but you’ve outdone yourself with today’s piece about your father-in-law. Terrific stuff and I, for one, sure wouldn’t mind seeing a little more!

– Jim

Jeff, I was deeply moved by your writing about your visit to Fabbriche di Vallico. You are right: the market will still be there tomorrow, and the day after tomorrow, but family is important too. With no family love to share, all the money will be meaningless. I do enjoy your daily analysis of the market, but the humanity side of your writing also reminds us there are other things that deserve at least the same degree of attention, if not more. Keep up the good work.

– Alex

Thank you, as always, for your kind and thoughtful insights. We look forward to reading them every day. Keep them coming right here.