About Me

Retired chief investment officer and former NYSE firm partner with 40 years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Saturday, April 02, 2016

Oil Price Update

The strong seasonal rally in the oil price should run out to the latter part of April, but when such a
seasonal run is underway, strong price momentum ends early in the month. Experienced traders
started dumping a little early, mainly I think, because the price failed at its 40 wk. or 200 day m/a.
Weekly WTIC

The rally in oil from early Feb. did take out the nearly two year price down trend line as well as the
13 wk. m/a. Although these were encouraging developments for the bulls, the key test would be at
the 40 wk. m/a as discussed in the March 9 post. A failure to take out the 40 wk. m/a in the spring
of 2015 was the kiss of death for the rally last year, and the failure to take out this resistance level
this year cannot be counted as a good omen. Even so, it might be wise to watch this market for a
little while longer before throwing in the towel. After all, this winter's price washout came on very
heavy volume and at price levels nearly 50% below break even for the industry.

The bottom panel  of the  weekly chart shows the 52 wk. rate of change for WTIC crude. The
Fed is watching this indicator to help it gauge the direction of inflation momentum, and if the
indicator improves further up to the zero level or better as the year progresses, this would go a fair
way in lifting the near deflation readings registered recently on the CPI measured yr / yr.

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