Crude Oil Gushes to New Highs

Apr 17, 2008: 8:44 PM CST

Stock Market bulls can’t be overjoyed with the reality that crude oil prices hit yet another all-time high today, closing just shy of $115.00. Unfortunately, a potential bullish pattern completion will take prices even higher.

If indeed the recent price consolidation throughout March was a type of ‘flag’ or consolidation pattern, then the approximately $24 point swing – if added to the bottom of the lower trend channel – will take prices from $100 up to potentially $126. The blue arrow truncates beneath the actual projection zone.

It looks like the potential move is about half-complete IF this possible technical pattern is to resolve. One wonders if price can indeed make it that far, and if it does, what the overall effect will be on the broader economy.

Will gas prices at the pump go to $4.00 per gallon? If so, and this could very well be the case, how much will consumers and businesses cut back on other spending? What will continue to suffer as a result?

Let’s pull back the camera to the weekly chart and see the stellar price rise that crude oil has been able to perform:

Even if you only trade the stock market (or are a stock selector) be aware of the trend of crude oil prices and other commodities, and also be aware of the specter of inflation and what that might mean given a slowing economy. Typically, commodity prices fall as a result of reduced demand during an economic downturn or recession, but we’re not yet seeing signs of that.

Instead, most commodity prices are surging like never before (rice has doubled over the last year – corn has been on a stellar run over the last two years).

Typically, the Fed raises rates to combat inflation, but to do so would be to jeopardize an already weak American economy.

Keep your wits about you and try not to get too caught up in this potential commodity bull market!


2 Responses to “Crude Oil Gushes to New Highs”

  1. todd Says:

    I really have to give you credit. Your entries on this site have become very informative and helpful. You have taught me much since I have started visiting your blog. Keep up the great work, it is much appreciated.


  2. J. Livermore Says:

    I like your work as well. From an e-wave standpoint, however, that’s a 5-wave up pattern from the January low, so it’s not likely that the final wave will equal the middle wave, as you suggest. The move is about done right here.