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Crude Oil Opportunity: Come On In, the Water's Fine
According to the financial mainstream, fundamentals are to markets what the moon is to the ocean's tides: Negative data drive prices down and ebbing out; while positive data draw them up and advancing in.
Here's the problem: Tides don't regularly shrug-off or ignore the lunar pull. If they did, no one in their right mind would ever go swimming in such unpredictable waters.
Financial markets, on the other hand, constantly defy the supposed "force" of fundamentals and take off running in entirely unexpected directions. Case in point: The recent rally in crude oil prices.
Allow me to explain. Back in late April 2009, there were more bears in the backdrop for crude prices than in the Alaskan wilderness, as these news items from the time make plain:
- Growing recession fears: An April 20 Commerce Department report revealed a higher than expected 6.1% drop in first-quarter Gross Domestic Product -- the steepest contraction in growth in 50 years.
- Supply Glut: Energy Information Administration reported an 18-year high in crude stockpiles, alongside a 10-year low in oil demand.
- Overall uncertainty and unrest: A 30% plunge in U.S. exports, a meltdown of the US auto industry, wider fallout from the housing slump in falling commercial real estate sales and rising safe-mortgage foreclosures, AND mounting tensions with North Korea care of the April 5th missile test firing of a nuclear warhead.
Need I say more?
Yet -- despite the bearish gravitational pull, crude oil prices broke out to the upside in late April and have since soared to their highest level in seven months.
Now, while the usual suspects struggle to find a logical reason for the rise -- AFTER five UP weeks and a $20-plus gain -- Elliott Wave International's Energy Specialty Service saw the move coming long BEFORE it began.
To wit: In the April 20 Energy Specialty Service, our Chief Energy Analyst Steven Craig recorded a special Interim Update Video on Crude Oil. There, he walked and talked viewers through the following price chart: (Elliott Wave labels have been removed for this publication)
No fundamentals. Just pure, objective analysis of the wave structure, time cycles, sentiment measures, and more -- all forecasting a move higher in crude as early as April 20.
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