Oil Price

In a spate of infectious profit taking, the boyz in the pits have taken
oil from the $146bl. area to just under $130. As discussed over the
past several weeks, I mentioned that oil was spectacularly and
fabulously overbought. For the disciplined trader, oil is still
substantially overbought, although the current measure is within
reason and no longer silly.

The powerful price uptrend underway suggests oil can trade within
a range of $142 - 117 bl. for July. At the lower $117 level, oil would
not be overbought given the volatility of the price.

Now oil closed just under shorter term support around $130bl., so it
will be interesting to watch the action around that level for the next
few days.

It should also be noted that with August, comes a seasonally weak
period for oil as the market anticipates a drop off in gasoline demand
in the northern hemisphere as summer drive time winds down.

I am happy to see the oil correct, but I will be watching carefully to
see if oil breaks decisively below $117 over the next few weeks, as
that would be much stronger evidence that this ominous uptrend
is expending itself. The best you can say now is that the players
are taking profits in the wake of dramatic gains through 2008 to
date.

I will not insult your intelligence by pulling up some fundamental
explanation in a market that lacks both transparency and veracity.

Chart here.