Click chart to enlargeI wanted to update a couple posts I made regarding the oil markets. In my last 2 posts regarding oil, I had suggested that momentum appeared to be waning, and that we may be near some degree of top. The next post highlighted the potentially bullish (though strange in my book) configuration of the commitment of traders on crude oil. In that post, I suggested that the strategy may be to use any pullback in crude prices as a buying opportunity to purchase oil related ETF's, etc. I did not give any time frame analysis or specific trade recommendations.
Since that last post, crude has come down significantly, and the bullish configuration of futures contracts remains similar to how it was in mid June.
The issue I wanted to bring to the table today is the price action of oil futures. The crude oil has been in a major bull market move since January 2007 rising nearly 200%. On the way up, the intermittent price declines have been somewhere in the 10-15% or less range. Then the past few weeks have seen a steeper and greater percentage decline than any decline since January 2007.
Whenever this type of situation occurs, I believe it is prudent to recognize that a significant shift is (or may be) occuring in the underlying market. This idea was developed by WD Gann in what may be referred to as uniform corrections. I refer you to literature on Gann to get further background on this idea. Also, gannglobal.com provides excellent information that is somewhat derived from Gann's ideas.
So, my personal view right now, is that we may be in for a more significant correction in oil prices than we have seen so far.
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