• 14 hours The Cannabis Culling Has Wall Street Disappointed
  • 20 hours Vigilante Offers $100,000 Bounty To Hack Banks
  • 2 days The Dairy Industry Is Dying
  • 2 days The Most Impressive Electric Vehicle Of The Year
  • 3 days Gold Miners Are Having A Stellar Second Half
  • 4 days How 3D Printing Is Turning Each And Every Industry On Its Head
  • 4 days Is The $3.5 Trillion Healthcare Industry About To Get Much More Transparent?
  • 5 days Gamblers Are Betting Big On Trump’s Impeachment
  • 5 days Even Banks Can't Answer Aramco's Trillion Dollar Question
  • 6 days Will Bezos Buy The Seattle Seahawks?
  • 6 days 6 Tech Trends Transforming The Travel Industry
  • 7 days Ousted Uber CEO Cashes Out $500 Million In Stock
  • 7 days Trump Prepares For Another Key Tariff Decision
  • 7 days The Free Money Bubble Is About To Burst
  • 8 days The Crushing Reality Of Poverty In America
  • 8 days Should You Buy Into The World’s Largest IPO?
  • 8 days The Infinite Possibilities Of Cosmic Energy
  • 9 days Analysts Link Walking To Economic Growth
  • 10 days Will Japan Turn Its Back On The Aramco IPO?
  • 11 days Global Debt Soars To $188 Trillion
Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Bob Loukas

Bob Loukas

Bob Loukas is the founder of "The Financial Tap", a membership site dedicated to helping traders and investors navigate the markets while increasing their expertise…

Contact Author

  1. Home
  2. Markets
  3. Other

Crude Oil Continuation

Oil on Fire

I like this Crude oil decline, and to date, it has been a picture perfect Cycle's development. Members of The Financial Tap were already tracking that expectation in advance, and positioned well to take advantage. But that big decline, which started on March 7th took many by surprise, judging by the extreme (Long) positioning seen with the COT report. And if you were not already short before the move began, the speed of the decline made it nearly impossible to establish a new position thereafter.

I believe that might not be the case anymore and another opportunity is at hand. We've seen a clear Cycle Low (March 14th) in my opinion, and that was confirmed with the rally after the FOMC last week. I know it was only a three day rally, but the move back to the 10-day moving average is possibly all that we're going to see, from a counter-trend perspective.

Light Cruse Oil Daily Chart

The COT report has improved somewhat, so obviously the "easy money" has been made on the short side. But the report remains bearish, and only tells me that the process of shifting from excessive long to short is still in progress, and will take time to complete. This also matches the fact that crude is now in an Investor Cycle decline, that process will be aided by leveraged longs capitulating and speculators picking up more short positions.

Interestingly too, crude oil sentiment is down, as expected...but still nowhere near the types of lows I believe we need to get to. When we consider the bearish COT report and the amount of time remaining in this Investor Cycle, I feel that we still have some way to go before looking for a meaningful bottom.

Crude Oil Optix

To the weekly chart, where I see a lot of downside work left in that chart. Now that this Cycle has given way and is in the declining portion, there is just no way it ends until it at least becomes oversold and touches the lower Bollinger bands. That would be the best case scenario for the bulls.

Therefore, it is my expectation that crude will fall another $7, at a minimum. Thereafter, it's really anyone's guess whether this ICL becomes a double bottom retest (around $42/$43) with the last ICL. Or in the worst case, this becomes a rout/crash that can be compared to the 2008 or 2014 declines. In that case, the downside over just the next two months is as far down as the low $30's!

Light Crude Oil Weekly Chart

 


The Financial Tap – Premium

The Financial Tap publishes two member reports per week, a weekly premium report and a midweek market update report. The reports cover the movements and trading opportunities of the Gold, S&P, Oil, $USD, US Bond's Cycles. Along with these reports, members enjoy access to a real-time portfolio with trade alerts.

Performance

The Financial Tap is primarily geared towards helping traders and Investors become better. We walk you through the process of Trade Setup and identification through the study of market Cycles. There is an extreme emphasis placed on Risk Management and on preserving capital.

For the past 12 month period, the Financial Tap model portfolio is up 17.5%, without ever using options/margin and without ever risking more than 1% on any given trade idea. The max draw-down in that 12 month period has been just 2.8%.

For more information and membership options – Please click here.

 

Back to homepage

Leave a comment

Leave a comment