A bit of a different post this evening – I just wanted to talk about a single commodity, briefly: crude oil
Before I get into this, I've got to say the amount of back-pedaling and bullishness is reaching record levels. The good folks over at Elliott Wave or rapidly back-pedaling away from their bold late-August prediction that Primary 2 was over, and even – is it possible? – friend-of-Slope Atilla is opening up the possibility that the S&P could hit 1140, which is over 10% higher from even these levels. Even molecool is considering 1070 almost a foregone conclusion, which lines up nicely with my projection of 1078.92 if we crack above 1039.
Who can blame them, though? The most the bulls have allowed the bears into this rally was a little bit in late June, and then they kicked them in the teeth and pushed things higher still. Can you believe we were at 861 less than 2 months ago? It seems like two decades ago.
All assets have, more or less, moved higher – – energies, equities, the Euro, silver, gold, ags – everything. Crude is a gigantically important asset, and, having doubled in short order, it seems poised in some eyes to keep lurching higher.
Let's take a look at a prior experience with crude oil – – this one from the late 80s and early 90s:
We see three major thrusts higher – the last one by far the most dramatic – followed by a extremely sharp fall and a partial retracement.
Now let's roll forward many years into the future and take a look at the exact same commodity. We can repeat the same words above: "We see three major thrusts higher – the last one by far the most dramatic – followed by a extremely sharp fall and a partial retracement."
I suppose this is the classic "5 up, 3 down" pattern, although the plunge and retracement are just the first two parts of the "down". What happened in the early 1990s after the period shown at the top of this post? I've tinted it:
Pretty interesting, yes? The bottom line for me is this: I think the likelihood is crude oil declining over the next couple of years dwarfs the likelihood of it climbing higher. And, with that, I shall say – good night and (smirk) good health.