I don't know Trade, I'm thinking along the same lines as Sandy...

I don't know Trade, I'm thinking along the same lines as Sandy at the moment. Just noticed the report from Aegis talking about Oil prices..

Interesting..

Aegis Report (part on oil)
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The price of oil has been a difficult one to call over the last few months – pre-empting a sell signal would have been a very risky task. So we have waited until we can see some evidence to suggest that the peak is in. There has been a lot of talk lately about the potential for the oil price to move significantly higher, with the new demand from China and India underpinning such a move. But with most commodity spikes, there will always be a reason why ‘this time is different’, and a reason for prices staying permanently higher. It’s a bit like the stock market - in the heady days of the Tech boom, there were so many perceived reasons why the tech stocks should continue to go higher, and yet at the bottom in 2003, most investors could only see reasons why they would continue to move lower. Extremes in price will always bring out extremes in emotion, so we should always be very wary at these points.

The price action since the recent high on the 20th August shows some negative signs, but from this alone we would be hard pressed to rate it a sell. There has been a sell signal on the long term chart since July, but as we have said on many occasions, sell signals in fast trending markets can often be a trap. So what would we look for to suggest an end to the price rises, and what makes this latest peak any different to the peak in March this year, or even the temporary peak that we saw in June? In our opinion there are several factors. This time, even though oil rose to historical highs, Heating oil did not, and also the price of unleaded gas has been coming off since late May. The other factor that we find interesting, although some may think somewhat obtuse, is the ratio of the oil price to the gold price. This ratio is at an interesting level, and it suggests that the out performance of crude oil is about to end. As we have said we think that the gold price can remain firm in the near term, so the ratio chart could merely be reflecting that, but we think that there is sufficient evidence to believe that the oil price will struggle to move higher from here.

One last reason that we are cautious on the oil price is the simple fact that we believe that the US market is primed to move significantly higher, and it would be unlikely to do so if energy prices kept rising from here.





Cheers,
Ace.