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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Rarebird who wrote (104179)	1/18/2017 8:07:41 PM
From: John Pitera	Respond to of 116753

HI RB, here is my crude analysis from mid Dec, it's looking at the 3 year weekly chart Message 30891533 potential Bullish Crude outlook for coming few quarters.?? Crude since May of 2016 has been in an ascending triangle from a low of $39 to a horizontal top of $52.... We should see a bullish breakout that will move us over the coming couple of quarters up to the 200 week MA at $69 to $70. .And almost too serendipitously; I notice that our best of breed PXD Pioneer Natural Resources has come out today with a price target of $70 for their coming 12 month target. I see how they are arriving at there number. Message 30891055 This macro move up in Crude makes sense in that it fits into the Global re-inflationary theme that the global yield curves are demonstrating. That will fit in with the developing secular global rise in interest rates and secular bear market in bonds. It will be very accretive to energy sector earnings which will expand the 2017 SPX corporate earnings number moving it past $137 and help to reduce P/E multiples or at least keep them from rising too much..... i. e. which why US equities will go higher than most people expect because earnings are growing. It will re- liquefy energy producing countries and give sovereign wealth funds like Norway, Saudi Arabia etc money to deploy into equities and it should create opportunities in some emerging markets. John -------------------------------------------- an additional thought on crude. What I wrote was the bull market case that is *Predicated on Crude being able to convincingly break out* above it's overhead resistance area and stay above it!. The 7% daily move in WTIC up to $54.50 on Dec 12th was driven by the news item of an OPEC-Russia production limit deal. The previous week's large rally day was again a OPEC related news event. Price moves and breakouts that are based on widely known "news" items are inherently much more suspect than powerful price moves that come without a good "explanation" of why they are occurring. The move in Copper that we had 6 weeks ago was a great example of a market that had been in a long congestion zone and started to move up powerfully and few had a plausible "reason" why.... market advancing strongly in price... why?.... dunno. that was a case where I was pretty confident that the market was going to break out of it's bullish technical formation before it actually did. Copper is a case study in the difference of a market move occurring for unclear reasons, which goes back to the notion that the smart money is not telling you that they are accumulating ahead of time. Those moves are explosive and are valid. Crude on the other hand has been attempting it's breakout on OPEC speculation... which usually wrong. Also I remember talking to you on SI back in the early spring when WTIC had bottomed in early Feb at 26.05 and I recall we saw an interview of the PXD CEO where he was saying it was possible to see one more look at $20 before the bottom might be in. So the fact that I even mentioned PXD and their long term outlook has me "curbing my enthusiasm" and instead falling back on the old tried and true idea of letting the market demonstrate what it is doing and not telling it what it is going to do. *BOTTOM LINE: Crude needs to hold $50 or it could fall back into the weekly pattern for another 8 or 13 weeks. If it spends a week up at $55... then the break out will be valid.* 3. Crude oil tumbled in response to the FOMC, erasing any post OPEC-Russia agreement gains, and then some. It recovered slightly later in the evening. -------------------------------------------------------- Here is the 10 year weekly on WTIC ...... Crude is basically meandering along between $50 and $55. $55 is the price level cited by a number of frackers as the price level where they can drill profitably. It appears to be acting as a pretty effective ceiling at the present. an argument can be made that on a weekly basis crude is in a sloping somewhat ascending wedge with momentum divergences occurring..... if one is inclined to that way of thinking we'll have to curb our enthusiasm about too super positive action occurring in crude and the overall energy complex. JP