I wrote a piece on Crude Oil in April that sketched out the big picture sentiment cycle. Let's take a look at the daily chart of the AMEX Oil Index itself.
The [$XOI.X] has formed a rising wedge on the daily chart. What is interesting is that the 20-day average true range is also at the peak value on this chart, plus the underlying, the OIH did a huge volume spike yesterday. All these are typically signs of a climax top.
The monthly [@CL] chart remains above the point of the wedge, so the parabolic move up is still intact so long as it stays above the upper pink dotted line. What is interesting is that if the analogy in gold/gold stock trading is applicable, i.e. the stocks typically lead the commodity, then what we have here is a case there the stocks are not leading the commodity. For all we know there is a big short squeeze in the pit or something, so that is another sign of near climax conditions. /Teresa
04.05.06 17:08 #