INDICATORS SUGGEST OIL IS PEAKING AND EQUITIES BOTTOMING

After a long, historic rally in oil, the short term Trend chart has finally turned red for the first time in 3 ½ months. I have been warning that this could happen ever since oil rose over $120. Today, oil closed at $129.29. Waiting for this to turn red before selling or selling short has proven to be helpful. Oil prices are now at risk of declining for the short term.

Oil is so due to correct since staying green since early 2007. When this long-term chart turns red, oil will be at risk of being in a longer-term downtrend. See how profitable and easy it is to use these signals.

Oil has not been oversold in the long term since early 2008, and before that in early 2007. Oil can be weak for a long time before becoming oversold again. It would make sense for oil to peak as equities bottom, which appears to be happening with yesterday’s biggest one-day rise ever in the US Banking Index of 12.3%!

This chart was shown in the July 14 Investment Update after it had just turned red for the first time since the beginning of 2008. It provided a clue that the bloom was coming off the ‘energy rose.’ You can see how easy and profitable it would have been to go long when this turned green and sell when it turned red.

Natural gas prices almost doubled since this long-term chart turned green last September. When this turns red it will be more negative because it means the longer-term trend will have turned down too.

The longer term oscillators for the US market averages are finally beginning to turn up from extremely oversold levels. Monday’s Investment Update will offer more confirmation if equities have indeed bottomed.

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