Oil in the Tank
July 16th, 2008 at 3:47pm · 1 Comment
The break in oil has formed a cycle-trap divergence, as shown by the red lines on the chart. Additionally, price has penetrated the net sell line that was formed at last week’s low. It’s interesting that the 135 area that provided such staunch support last week gave way quickly once the inventory numbers were released this morning, as oil quickly fell to 132, the important support tested so many times during June. Following that 132 bottom, the old 135 support became tough resistance that rejected prices for the remainder of the day.
I firmly believe, that an important oil top was made last Friday at 147.30 on the August future. The next step is for that 132 support to give way. The sooner that occurs, the sharper the ensuing decline will be. Falling oil prices will be the catalyst for the stock market rally that began today.
click chart to enlarge
Tags: Crude Oil · S&P 500
1 response so far ↓
1 deuxsous // Jul 16, 2008 at 9:30 pm
Chris,
Bravo to you!
People put this sort of stuff down as BS, but Gann knew what he was doing. When markets are screaming up, the big players need some decent guess about where to get out. Using my one month forward perpetual crude oil futures data base, the 147.55 perpetual high was exactly 4 times the 1990 high.
Tom
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