UPDATE ON CRUDE OIL (11:30 pm EDST)
Crude oil's current medium-term cycle started with its low of $61.11 on Aug. 23 (Dec. contract chart). This cycle has been VERY bullish as the price has already rallied to $85 in just 9 weeks. As is characteristic of bullish cycles, the first sub-cycle correction on Sept. 30 was a very brief and shallow dip to $72.82 after which the strong rally continued.
A second sub-cycle correction most likely happened last Thursday as prices dropped to $80.58. We haven't been buying these dips as they are unusually shallow and above normal targets for corrective drops. This truncation of normal corrections indicates an extremely bullish market.
It is always difficult to chase a strong rally, and I am not enthusiastic about doing it now. There is, however, a strong potential for crude prices to go much higher as it appears we are in the early phase of several longer-term cycles in this market. Crude prices are currently oscillating inside a steep uptrend channel presently defined by a low around $82 and a high around $88. Prices have already rallied back to near $85 from last Thursday's low. If they get to $88 - $90 and stall, we may watch for another drop to the channel bottom and consider buying there. If prices can break above the channel top, we could see crude get as high as $110 - $130 in 2022. We are staying out of crude for now.
Crude oil's current medium-term cycle started with its low of $61.11 on Aug. 23 (Dec. contract chart). This cycle has been VERY bullish as the price has already rallied to $85 in just 9 weeks. As is characteristic of bullish cycles, the first sub-cycle correction on Sept. 30 was a very brief and shallow dip to $72.82 after which the strong rally continued.
A second sub-cycle correction most likely happened last Thursday as prices dropped to $80.58. We haven't been buying these dips as they are unusually shallow and above normal targets for corrective drops. This truncation of normal corrections indicates an extremely bullish market.
It is always difficult to chase a strong rally, and I am not enthusiastic about doing it now. There is, however, a strong potential for crude prices to go much higher as it appears we are in the early phase of several longer-term cycles in this market. Crude prices are currently oscillating inside a steep uptrend channel presently defined by a low around $82 and a high around $88. Prices have already rallied back to near $85 from last Thursday's low. If they get to $88 - $90 and stall, we may watch for another drop to the channel bottom and consider buying there. If prices can break above the channel top, we could see crude get as high as $110 - $130 in 2022. We are staying out of crude for now.
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