Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
S&P 500 Just 2% Below Record High, But There's More Stock Market Uncertainty - 19th Jul 18
Stock Market Technical Picture - 19th Jul 18
Gold Market Signal vs. Noise - 19th Jul 18
Don’t Get Too Bullish on Gold - 19th Jul 18
Bitcoin Price Rallies to Upper Channel – What Next? - 19th Jul 18
Trump Manchurian President Embarrasses Putin By Farcically Blowing his Russian Agent Cover - 19th Jul 18
The Fonzie–Ponzi Theory of Government Debt: An Update - 19th Jul 18
Will the Fed’s Interest Rate Tightening Trigger Another Financial Crisis? - 18th Jul 18
Stock Market Investor “Buy the Dip” Mentality is Still Strong, Which is Bullish for Stocks - 18th Jul 18
Stock Market Longer-Term Charts Show Incredible Potential - 18th Jul 18
A Better Yield Curve for Predicting the Stock Market is Bullish - 18th Jul 18
U.S. Stock Market Cycles Update - 18th Jul 18
Cayton Bay Hoseasons Caravan Park Holiday Summer 2018 Review - 18th Jul 18
What Did Crude Oil - Platinum Link Tell Us Last Week? - 17th Jul 18
Gold And The Elusive Chase For Profits - 17th Jul 18
Crude Oil May Not Find Support Above $60 This Time - 17th Jul 18
How Crazy It Is to Short Gold with RSI Close to 30 - 16th Jul 18
Markets Pay Attention Moment - China’s Bubble Economy Ripe for Bursting - 16th Jul 18
Stock Market Uptrend Continues, But... - 16th Jul 18
Emerging Markets Could Be Starting A Relief Rally - 16th Jul 18
(Only) a Near-term Stock Market Top? - 16th Jul 18
Trump Fee-Fi-Foe-Fum Declares European Union America's Enemy! - 16th Jul 18
US Stocks Set For Further Advances As Q2 Earnings Start - 15th Jul 18
Stock Market vs. Gold, Long-term Treasury Yields, 10yr-2yr Yield Curve 3 Amigo's Update - 15th Jul 18
China vs the US - The Road to War - 14th Jul 18
Uncle Sam’s Debt-Money System Is Immoral, Tantamount to Theft - 14th Jul 18
Staying in a Caravan - UK Summer Holidays 2018 - Cayton Bay Hoseasons Holiday Park - 14th Jul 18
Gold Stocks Summer Lows - 14th Jul 18
Trump US Trade War With China, Europe Consequences, Implications and Forecasts - 13th Jul 18
Gold Standard Requirements & Currency Crisis - 13th Jul 18
Focus on the Greenback, Will USD Fall Below Euro 1.6? - 13th Jul 18
Stock Market Outlook 2018 - Bullish or Bearish - 13th Jul 18
Rising Inflation is Not Bearish for Stocks - 13th Jul 18
Bitcoin Picture Less Than Pretty - 13th Jul 18
How International Observers Undervalue the Chinese Bond Market - 13th Jul 18
Stocks Trying to Break Higher Again, Will They? - 12th Jul 18
The Rise and Fall of Global Trade – Redux - 12th Jul 18
Corporate Earnings Q2 2018 Will Probably be Strong. What This Means for Stocks - 12th Jul 18
Is the Relative Strength in Gold Miners to Gold Price Significant? - 12th Jul 18
Live Cattle Commodity Trading Analysis - 12th Jul 18
Gold’s & Silver’s Reversals’ Reversal - 12th Jul 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

Crude Oil, Natural Gas and AMEX Oil Index Stocks Analysis

Commodities / Crude Oil Feb 25, 2011 - 07:23 AM GMT

By: David_Petch

Commodities

Diamond Rated - Best Financial Markets Analysis ArticleThe daily chart of oil is shown below, with oil shooting well above all three Bollinger bands, suggestive that oil will consolidate for at least 7-10 days before trending higher. Normally, when prices run well above upper Bollinger bands, a consolidation is required, or a pullback is in order. Given the fact that all three lower Bollinger bands are positioned in close proximity to each other and the lower 55 MA Bollinger band curled lower, oil prices are highly likely to remain above $90/barrel and eventually rise above $100/barrel before summer's end. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in all three instances.


The %K in stochastic 1 appears to have curled up and if the trend continues, then upside should drift into late March/early April. As mentioned, the spike above all three upper Bollinger bands is likely to have a consolidation period before advancing higher....geopolitical tensions of course could stretch this, which would make the collapse price much more drastic...remember the Bollinger band rule...it always  resorts to the mean and if anything stretches outside of them, then they will spend a consolidation time between them again. If the opposing Bollinger bands are spread out (not the case here) then a dramatic reversal generally occurs. If opposing Bollinger band are in close proximity to each other (as per below), then further upside potential exists after the short-term overbought condition wears out.

Figure 1


The weekly chart of oil is shown below, with all three upper Bollinger bands in close proximity to each other. Oil prices spiked above all three upper Bollinger bands, indicating that a short-term pullback is likely. Lower Bollinger bands are in close proximity to each other and fanned out, suggestive that a break in oil prices above $100/barrel is not likely to occur until later this summer/early fall. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and above the %D in 1 and 3. Positioning of the %K in stochastics 2 and 3 suggest that sideways to upward price action in oil is likely to persist into late fall.

Figure 2


The monthly chart of oil is shown below, with upper 34 and 55 MA Bollinger bands still drifting well above the current price in close proximity to each other, suggestive that the the consolidation period is still not yet complete. The lower 55 AM Bollinger band appears to be curling over, suggestive that further upside potential lies ahead in the not too distant future. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in 1 and 2 and beneath the %D in 3. Extrapolation of the %K trend in stochastic 1 strongly suggests that the price of oil will remain sideways up between December 2011 and June 2012. It is impossible to pin any sort of tight date for when a top is put in place because a lot can happen between now and then. However, there will be volatility along the way as this is “Climbing the Wall of Worry”.

Figure 3


Natural Gas

The daily chart of natural gas is shown below, with upper 34 and 55 MA Bollinger bands still rising, suggestive that a bottom has not yet been put in place. When both the upper 34 and 55 MA Bollinger bands curl down, a bottom will likely have been put in place. Lower Bollinger bands are in close proximity to the current price, indicating that further downside is probable. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in all three instances. Positioning of the %K in stochastics 2 and 3 suggest that a bottom is not due until at least mid to late March.

Figure 4


The weekly chart of natural gas is shown below, with lower 21 and 34 MA Bollinger bands in close proximity to each other. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D  in 1 and 2 and beneath the %D in 3. Given the fact the %K in stochastics 1 and 2 curled down and the %K in stochastic 3 is still trending lower, a mid-term bottom in natural gas prices in not likely due for another 4-6 months. Playing the HNU.TO or equivalent long natural gas funds could be profitable by late summer...but not now.

Figure 5


The monthly chart of natural gas is shown below, with upper and lower 34 and 55 MA Bollinger bands still far away from the current price. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in 1 and 2 (marginally above in 2) and beneath the %D in 3. The monthly chart suggests further grinding in the price of natural gas...prices of natural gas are nearly ½ that of Europe, so expect a big jump in price as this decade continues, especially when Peak Oil really begins to sink in.

Figure 6


AMEX Oil Index

The daily chart of the XOI is shown below, with upper 21 and 34 MA Bollinger bands riding the index higher, while the upper 55 MA Bollinger band continues to rise well above it...this suggests a short-term top is strongly looming. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in 1 and 3 and beneath the %D in 2. There is a negative divergence between stochastics and the XOI, suggestive that a 200-300 point decline is probable in the not too distant future. This ties into commentary about the S&P 500 index trading between 1050-1400 over the course of the next 12-18 months....the correction coming will be 15-20%, while the 40-50% correction is likely to initiate in early 2013 through 2014. At that particular point in time, owning cash will be good, because at the bottom, there will be many deals.

Figure 7


The weekly chart of the XOI is shown below, with all three upper Bollinger bands riding the index...any brief pause will indicate a topping process. The lower 34 MA Bollinger band just curled up, so when the lower 55 MA Bollinger band curls up, a top will most likely have been put in place. There is a 6-8 week lag between these events, so expect 2-3 weeks of weakness in the XOI, followed by a likely rebound to at or near current levels. This topping process could take 12 months... Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K beneath the %D in 1 and above the %D in 2 and 3. Based upon positioning of the %K in stochastic 3, a longer-term top is not likely due until the June 2011 time frame.

Figure 8


The monthly chart of the XOI is shown below, with lower 34 and 55 AM Bollinger bands still well beneath the index, while the lower 21 MA Bollinger band just curled down. Full stochastics 1, 2 and 3 are shown below in order of descent, with the %K above the %D in 1 and 2 and beneath the %D in 3. Generally for a market crash to occur, monthly charts will have a setup pattern of extreme overbought conditions, as per 2008. At present, there is no such setup...notice the %K above the %D in stochastic 1. We are likely to have 1-2 months of a correction coming up, but a long-term top is not due until sometime in 2012, based upon positioning of the %K in stochastic 1. Those in dividend paying energy stocks...prices are going to oscillate somewhat, but based upon this chart, not by much (15-20%). The really big correction is not due until 2013-2014, which will see extreme hardships as governments really begin to lay people off. When this occurs, then asset deflation of real estate could really cause a bottom.

Figure 9


The monthly chart of the XOI is shown below, with the thought path the XOI followed shown in green (added way back in November 2009). I have not done any sort of projections yet, since I am waiting for wave B to complete. It does appear however, that wave B is completing a zigzag pattern. I will be waiting for confirmation of a top so that I can add some downward price projections. A pullback to the 1150 area SHOULD be expected (this could happen within 4-6 weeks before putting in a bottom), so base trading decisions on this, depending upon how one is playing the market (really short-term or longer-term). The stock market is not “As the Crow Flies” (I wrote an article on the web by the same title many years ago for anyone interested in Googling it)..rather it meanders like a brook in the countryside. Many will say the stock market is going to hell...it will, but again, not until early 2013 after the post December 21st, post survival party occurs ☺. The next 12-18 months is going to be a traders paradise...those wishing to go short...be careful as the Captain suggested because one should be in front of a computer for this at all times.

Figure 10



That is all for today...back tomorrow with an update of the US Dollar Index. This is an important update, since it is following a path not too many expect (The expected pattern has been unfolding now for the past few months as described previously)

By David Petch

http://www.treasurechests.info

I generally try to write at least one editorial per week, although typically not as long as this one. At www.treasurechests.info , once per week (with updates if required), I track the Amex Gold BUGS Index, AMEX Oil Index, US Dollar Index, 10 Year US Treasury Index and the S&P 500 Index using various forms of technical analysis, including Elliott Wave. Captain Hook the site proprietor writes 2-3 articles per week on the “big picture” by tying in recent market action with numerous index ratios, money supply, COT positions etc. We also cover some 60 plus stocks in the precious metals, energy and base metals categories (with a focus on stocks around our provinces).

With the above being just one example of how we go about identifying value for investors, if this is the kind of analysis you are looking for we invite you to visit our site and discover more about how our service can further aid in achieving your financial goals. In this regard, whether it's top down macro-analysis designed to assist in opinion shaping and investment policy, or analysis on specific opportunities in the precious metals and energy sectors believed to possess exceptional value, like mindedly at Treasure Chests we in turn strive to provide the best value possible. So again, pay us a visit and discover why a small investment on your part could pay you handsome rewards in the not too distant future.

And of course if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these items.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

Copyright © 2011 treasurechests.info Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

David Petch Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules