Deep Dive
The Oil Daily Breakout and Immediate Targets
Northstar walks through a crude oil trade idea that identified a descending breakout line where price was heading lower. The original thesis imagined a bullish scenario where oil would hold above the 36-day moving average, let that average catch up, build momentum sideways, then break out above the neckline with targets of 110 and potentially 117. That setup has largely played out. After dipping below the 36-day moving average during a recent correction, crude bounced back and is now trading above it again, showing a solid daily close above the key neckline. The immediate targets are 104, and if that holds, 110, eventually working toward 113 as distance from the simple moving average stretches. Northstar emphasizes this won't happen in a straight line — profit-taking will occur as the price gets too far extended from the 36-day SMA, but the directional bias is now firmly upward on the daily timeframe.
Oil Versus Silver: The Ratio Inflection Point
To contextualize why oil's breakout matters, Northstar introduces the oil-priced-in-silver chart, which shows which asset is better to hold over time. This ratio just bottomed with unmistakable capitulation volume — the kind seen at both blowoff tops and major bottoms. On the weekly chart, oil is now climbing above both the 12-week and 36-week moving averages and emerging from the Ichimoku cloud, setting up higher lows. The ratio is approaching a descending trend line, and if it breaks above that and overcomes horizontal resistance levels, it confirms oil is entering an uptrend relative to silver. Critically, silver is doing the opposite: it staged an explosive rally that appears to be a blowoff top relative to oil, followed by sideways consolidation. Northstar connects this to prior cycles where oil bottoming led to silver topping, and emphasizes that moving averages tell the objective truth — when they're all above price in a nice uptrend, you're in an uptrend; when they're jumbled or falling below price, that's when you need to favor the competing asset.
Silver Miners in Correction While Energy Plays Wake Up
Northstar shows that gold and silver miners are mirroring silver's pattern — still in correction mode with broken rising support lines, despite tactical rallies that seemed promising. The miners have halted at horizontal resistance longer than expected, and this is a known dynamic when oil outperforms. The key evidence is that XLE, the energy sector ETF, has already started moving upward, sniffing out the oil-versus-silver bottom before oil's daily chart fully resolved. This is extra confirmation because XLE tracks tailwinds from that ratio improvement. The refiners (crack spread) tell an even stronger story — they've been outperforming oil producers for years and just broke above their moving averages on the monthly timeframe, suggesting even more upside potential for the energy complex than crude alone. Northstar stresses that the miners could form an ascending triangle or other consolidation rather than a sharp V-shaped crash, but the technical message is clear: downward momentum in miners is slowing, sideways action is building a base, and once the ratio picture fully resolves, that's when miners become interesting again.
Exxon, Inflation, and the Macro Backdrop
Northstar zooms out to Exxon versus the S&P 500, showing a 60+ year chart with a possible major bottom in the making. There's a huge consolidation forming, and if Exxon breaks above that base, it would mirror the kind of 2000s and 1970s breakouts that led to sustained outperformance versus stocks. He then overlays inflation rate cycles with oil price, noting that they move together — oil is a component of inflation, so higher oil drives higher inflation expectations. The key is that inflation is making higher lows, which puts a floor under oil prices. These cycles of rising inflation lows suggest significant tailwinds ahead if oil can break out on the monthly chart. Northstar acknowledges that macro charts are context, but price action on the assets you're actually trading is what matters most, which is why TNS (a trading system he references) signals are critical. The refiners are particularly interesting because they've held gains and broken both moving averages on the monthly, offering a potentially sharper breakout play than crude itself for those seeking maximum leverage to an oil rally.
The Rotation Thesis: When to Swap Oil Plays Back to Miners
Northstar layers in the crack-versus-miners ratio to explain the full rotation playbook. Oil versus miners showed a capitulation bottom and is now in profit-taking territory — extreme. Shorting oil-versus-miners at prior highs and going long miners into the lows would have been profitable swaps. But right now, with oil still early in its breakout and miners still correcting, the move is to favor oil plays over miners. He compares the crack-to-miners ratio to the oil price itself as a guiding oscillator and notes that once the crack breaks out and sustains above key levels, that ratio should keep climbing. This tells him oil refiners and energy plays have room to run before it's time to rotate back into gold and silver mining exposure. Northstar emphasizes that these ratio charts oscillate and aren't trading setups themselves, but they're invaluable for spotting which asset class is overvalued or undervalued relative to its peers. The evidence is stacked: oil and energy refiners are waking up, miners are asleep, and that relative outperformance should persist until all the technical evidence flips.