Crude Oil- Hits two 25-year support lines and is breaking out!

I was very blessed and lucky to be influenced by Sir John Templeton, a couple of decades ago. Sir John shared that other than the bible, the book below was the most important book he had ever read.

populardelusionsbook

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Two months ago in our Sector/Commodities Sentiment extremes report, we addressed that a “Popular Delusion” could be taking place, in the most important commodity on the planet. The Power of the Pattern made the case at the time that Crude Oil was due a rally and the rally in Crude Oil, could be good for stocks.

On February 25th we shared the chart below, reflecting that an asset had just experienced its largest 2-year rally ever and momentum looked to be overbought. What would you have done with the chart below, two months ago?

joefriday largest 2 year rally in history feb 26

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The chart above was shared two months ago (see post here)  What would you have done at this price point? The chart above was “Crude Oil” on a monthly basis, which was inverted (turned upside down). We made the case with Premium Members that Crude Oil looked to be on support and that a rally in Crude Oil, could be good for stocks. A couple of days later, members shorted the Fear index, buy purchasing XIV. The following month, stocks had a good rally and XIV screamed higher, moving up 31% on the month.

Below is an update on the chart above.

crude oil breaking key falling resistance april 27

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Crude Oil on a monthly closing basis, hit triple support at (1), two months ago, when it was trading near $30 a barrel. Since the time of the Joe Friday post on 2/25/16, Crude Oil has rallied nearly 50%, in 60-days. Now Crude Oil is breaking above falling resistance, while monthly momentum remains oversold at (2) above.

The Power of the Pattern felt like a Popular Delusion was taking place then (way too many people were bearish Crude Oil), the most important commodity on the planet. As mentioned above, while Crude looked to be presenting an opportunity to make money in oil and stocks in general and we still feel Crude Oil will highly influence stocks going forward.

If you feel you could benefit by this type of research and Power of the Pattern analysis, we would be honored if you signed up and become a member of our daily or weekly research reports. 

If you would like a free copy of the Popular Delusion in Oil report, produced two months ago, send an email to services@kimblechartingsolutions.com and we will be honored to email it to you.

 

 

Should you sell in May? What happens here could tell you!

 

nyse crude oil one year trend resistance april 25

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A popular theme has been to “Sell In May, and Go Away!” Following this idea paid off last year, will it again this year?

Historically, stock market performance hasn’t been the strongest from May to October and last year was no exception. The above chart looks at Crude Oil and the New York Stock Exchange, over the past 8-years. As you can see, a decent correlation has been taking place with these two.

A year ago, Crude Oil and the NYSE Index both peaked in May at (1) above. It paid to lower exposure to Crude Oil and Stocks a year ago.

Crude Oil and the NYSE Index both remain in down trends (lower highs and lower lows). Both are attempting to change this trend, as both are testing falling channel resistance at (2) above.

At this time, resistance and resistance is resistance until broken.

Both assets are testing breakout levels at this time. Portfolio construction could be highly influenced by what both of these do at (2) above.

How these assets performance at resistance, could go along way, in determining if one should “Sell In May” this year!

If both of these breakout, it could well be different this time!!!

Bounce could take place, after 80% decline, says Joe Friday

joe friday vrx tesing dual support april 21

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Could an opportunity be taking place, after an 80% decline in price? Yes

Valeant Pharma has been in the news, for all the wrong reasons, since last summer. The news has been bad and the price action of the stock has been even worse.

The huge decline in VRX over the past 9-months has VRX testing two long-term support lines, that have been around 16 and 20-years, with both of them meeting at (1) above.

This large decline has momentum deeply oversold and volume has shot up, potentially reflecting panic selling.

Joe Friday Just The Facts…A bounce could take place in this very hard hit stock at (1). This stock is hitting an almost must hold support zone. If support does not hold, it would be bad for the stock and could be hard on the Bio-Tech sector. What VRX does at (1), is very important in several ways!