SB Trade Desk is a premium trading/analysis service with veteran traders Jamie Saettele & Michael Boutros offering market commentary on FX, Commodities & Equity Indices. Subscribers gain access to daily trade setups (entry, limit & stop), live webinars & exclusive intra-day squawk updates on the markets you follow – Learn more
9/3/2016: Crude Oil – Drilled Until November?
Crude Oil Weekly
Down big, sideways to up, and down big again. This is the general path that crude oil took from July 2008 to February 2016. It’s also the general path that crude took from September 1990 to November 1998. Both are 8 year cycles and both are relatively the same shape so crude could already be on the path to much higher prices from the February low (wrote about that here). Keep an open mind though. The comparison between the 2 cycles have exhibited varying degrees of similarity with the closest matches being the very beginning (9/90-2/91 matches 7/08-11/08), middle (12/93-7/95 matches 9/11-4/13) and end (maybe…still a work in progress) (12/96-11/98 matches 9/14 to 11/16?). In fact, a number of turns within the 2 sequences match perfectly (see close-up chart below). If this ends with a perfect match then the final crude oil low (does NOT have to be below the February low) will be next week or in mid-November. The November date matches well with seasonal tendencies. As this plays out, I’ll hone in on price specifics for support but be aware of the April low and 61.8% retracement at 35.24/84.
There’s more to this story. The most important chart that I’m following is the US 30 yr. T-Bond. There is the possibility of a November top (see analysis from June) in that market so the November timing in crude fits extremely well with a pivot in bonds. In 1998, crude dropped to trend lows in November but bonds didn’t make a new high (top back then was September). This is imaginative but perhaps the divergence is the opposite this time with crude having already put in a low (February) and bonds having to make one more high to create divergence with bonds before the turn.
Crude Oil Weekly
Crude Oil and US 30 yr. Bond Weekly
If you want more insights, including analysis of intraday, daily, weekly and even monthly charts, member only webinars, Twitter updates, and specific trade plans, then consider joining the SB community (click here for more).