One of the more interesting price cycles I’ve worked on over the years is that of oil. Oil and gas have proven to be lucrative trading vehicles, and their price movements have been extremely helpful in forecasting interest rates, currencies and inflation.
The most fascinating cycle I’ve discovered is the periodic peaks and crashes in WTI. The chart below shows that important highs (highlighted) have occurred like clockwork.
2003 – 2008: 1961 days
2008 – 2013: 1874 days
2013 – 2018: 1862 days
The last three important lows have been just as consistent and illustrate the on-again, off-again correlation between oil prices and equities. [The strong, positive correlation was marred by a significant divergence between June 2014 – Mar 2015.]
The chart begs some very important questions: will the cycle continue and, if so, will equities follow suit?
2001 – 2009: 2614 days
2009 – 2016: 2583 days
2016 – ???
In my opinion, this is the most important chart to watch over the next year or two.
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