PUBLISHED BY INSTITUTIONAL ADVISORS
June 7th, 2009
Technical observations of RossClark@shaw.ca
Crude Oil has managed to produce a daily upside exhaustion alert as of June 2nd. This is the ninth such signal since the invasion of Kuwait in 1990. A 50% correction of the most recent rally ($57.65) from $46.70 to $68.60 will be a reasonable initial target.
The run to Peak Oil at $147 eleven months ago matched the pattern of the commodities boom in the early 1970ís. In particular, it most resembled copper. Last June, oil generated upside exhaustion alerts on a weekly and monthly basis. The subsequent decline generated daily capitulation alerts in the second week of October. We recognized that the optimum strategy was to bypass the oil and do covered writing in the related stocks in anticipation of a multi-month consolidation.
By December-January there were weekly and monthly capitulation alerts in place as the price based out in the mid $30ís to high $40ís. Resistance was expected in the low $50ís and then again at $58 to $60 as prices first tested the 100-day moving average and then the 150-day average. So, while the patterns have mimicked one another, crude oil accomplished a more bullish bias at the bottom and staged a better rally.
July-August would represent an appropriate time window for the next tradable low especially if the daily RSI(14) reading is into the low 30ís.
BOB HOYE, INSTITUTIONAL ADVISORS
June 7th, 2009
CHARTWORKS WEBSITE:: www.institutionaladvisors.com
The opinions in this report are solely those of the author. The information herein was obtained from various sources; however we do not guarantee its accuracy or completeness. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each securityís price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Neither the information nor any opinion expressed constitutes an offer to buy or sell any securities or options or futures contracts. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk. Moreover, from time to time, members of the Institutional Advisors team may be long or short positions discussed in our publications.
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