LIGHT CRUDE OIL JUST BROKE OUT Now the Fun Really Begins!

Loyal readers are well aware that in early 2016, I opined that the CRB Index, the Canadian Dollar, and the TSX made an important low. Moreover, impressed by Oil’s bullish technical structure, I have commented on Oil no less than six times (July 28, 2016, “What Are Commodities Telling Investors?”, December 11, 2016, “When Oil Pops, the Fun Will Really Begin”, August 27, 2017, “Gold & Oil – Two Laggards”, September 14, 2017, “Brent Crude Oil”, September 20, 2017, and September 24, “Oil Is Starting to Boil!”). That Brent Crude has already broken out in September and with the global growth accelerating, I was certain that Light Crude, too, would break out.

As expected, on Friday, Light Crude Oil broke out of a 33-month “head-and-shoulders” bottom. Technical measuring implications call for a move to $85.00 – $90.00 or higher. Early this year, I opined that over the next 2 – 3 years, Oil will reach $75.00 – $85.00 or higher. Now, it appears to be higher.

Friday’s upside breakout by Light Crude Oil further confirms that the global recovery is gaining momentum. Those who have been heeding my advice to accumulate energy and energy-related issues will be handsomely rewarded.

As mentioned in my previous reports, the long-term buy signal in January, 2016 and the subsequent downtrend breakout suggested that the bear market is over and a bull market has commenced.

As noted in my previous comments, the five-wave correction this year (see A, B , C, D, & E), the intermediate buy signal in the week of June 19, and the upside breakout from a “symmetrical triangle” in the week of September 11 guaranteed new bull market highs ahead. Not surprisingly, Light Crude Oil did break out on Friday. Technical measuring implications call for an intermediate target of $85.00 or higher.

In September, Brent broke out of a 33-month “head-and-shoulders” bottom. Technical measuring implications call for a move to $90.00 – $95.00 or higher.

In the week of September 11, Brent broke out of a 33-month “head-and-shoulders” bottom with a “down-sloping neckline”. As mentioned earlier, an intermediate target of $90,00 – $95.00 or higher can be projected.

********************

WHEN OIL POPS, THE FUN WILL REALLY BEGIN

Many pundits remain bearish on Oil pointing to over-supply, sluggish growth, and the increasing competition from alternative energy. Some are predicting Oil will drop to $30 or even $20. The market, however, is telling investors a different story. If the bears are correct, Oil should be tracing our lower highs and lower lows. Why, then, is Oil behaving so tenaciously for it’s trading near its recovery high and flirting for an upside breakout?

Also, since July, energy issues have been surging. Moreover, many of the energy-related issues have broken out of “head-and-shoulder” bottoms (see my November 20 report, “Energy and Energy-Related Sectors – Global Recovery Is Gaining Momentum”). Even more amazing, Natural Gas has more than doubled in the last nine months. If oil is heading to $30 or $20, why are these sectors behaving so strongly?

Clearly, smart/informed investors see what I see. After seven years of monetary stimulation, a synchronized global recovery has finally take hold and will accelerate in the months and years ahead. Demand for energy and other commodities, therefore, will rise. Indeed, commodities from “A” to “Z” have been surging.

The”year-end melt-up” that I predicted since September, is well underway. The buying panic will continue. When Oil breaks out on the upside (which may well happen this coming week), the buying panic will turn into a frenzy.