Just when you think you've got a handle on the way certain fundamentals affect the market of your choice -- POOF! The rules change. Take, for example, the supposed set-in-stone logic that prices of crude oil rise when two things happen: The U.S. dollar loses and gold gains.
As recently as late October 2009 -- with oil prices soaring to their highest level for the year -- this correlation was a constant mainstay of the mainstream financial media. Here, the following news sources from the time
- "Crude rose above $80 per barrel for the first time since October 2008 as the dollar fell to a 14-month low against the euro. I'm looking for further downside on the dollar, so I expect it will underpin oil prices." (Bloomberg)
- "Oil and Gold rise as investors banking on an economic recovery clamored to buy commodities that could benefit once global commerce revives." (New York Times)
YET -- from its October 20 peak, crude has endured a sharp sell-off to its lowest level in one month. AND, during the second half of its decline (from November 3-14) the U.S. dollar continued to weaken, while gold's winning streak didn't skip a beat the entire time.
The fact is, the near- and long-term trend changes in crude are not only dominated by outside factors but also by the endogenous forces of sentiment, time and price cycles, and Elliott wave structure. By consulting these objective measures, our analysts have a fighting chance of seeing the markets' major turns before they happen -- not afterwards.
To wit: In the days leading up to crude oil's most recent downturn, the October 16 Energy Specialty Service presented a live video update that included the following chart below:
In the words of Energy Specialty Service editor Steven Craig --
"Further near-term gains seem likely, but the market should be close to an interim top."
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