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Crude Oil finds itself on a support line that has been very strong for the past four years. As Crude oil has approached or hit this support line the S&P 500 has been at or nears key lows as well. We have to view the above chart in Crude Oil this way…support is support until broken and if Crude rallies, stocks should follow.
One thing I find interesting about this support test, that is a little different this time is this.…the inset chart reflects that over the past few years that Crude has been on support, traders have had a vastly different set of positions than they do now. The way traders are positioned at this time has actually been followed by declines in Crude.
This situation reflects that the test of support by Crude oil MAY NOT BE your average test of support, when looking back over the past four years.
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Crude for the most part has traded between the low 80’s and around $100 for years, little conviction either way. Traders right now are big time long and they have been wrong the past few highs and lows.
We should see a bounce here. The SP500 almost never declines before having made a double, or even triple top. SPY broke support today, it would take quiet some time to go back to 1598 while staying beneath support.
RE This and…
https://www.kimblechartingsolutions.com/2013/04/doc-copper-bullish-sentiment-plunges-critical-price-point-for-copper-crude-oil/
Keep in mind global oil production plateaued in 2005 and became unresponsive to price signals.
Either demand is going to die really quickly here or demand is going to skyrocket.
What do you think?
(Thinks) From 2008 to now this pattern is a closing pennant. This is rather a long time, but I am still expecting the Kondratievian rollover, which is a pretty long term process. So perhaps a five year warning is appropriate for a 60 year cycle.
Now don’t everyone go and blow my head off: just thinking.