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Oil At Critical Point Again.

  • Written by Syndicated Publisher No Comments Comments
    May 8, 2013

    For some time now we’ve been advising keeping an eye on the direction of commodities and oil prices, since they are harbingers for the direction of the economy, and probably therefore the stock market.

    Oil has been locked in a symmetrical triangle formation for more than two years. As I noted previously with bonds and gold, the direction of a market’s breakout from such a pattern usually indicates its next direction for awhile.

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    So far each time it plunges it creates concerns in the media that the bottom will drop out. But it only gets to the lower limit of the pattern again and begins another rally attempt.

    And every time oil looks ready to break to the upside it gets only as far as the upper limit of the formation and plunges again.

    At the present time its has rallied back above $95 a barrel and is again creating confidence of $100 and more being just ahead.

    But it is again up against the upper limit of the formation, still at a lower high.

    The uncertainty can’t continue much longer. With each move the triangle is tightening and the break out of it in one direction or the other will have to take place.

    It’s the annual Warren Buffet love-fest on financial TV.

    In the aftermath of Berkshire Hathaway’s weekend share-holders’ meeting and promotional activities, Warren Buffett is all over the financial media with his typical all’s well with the market interviews.

    While the media is usually friendly in its interviews with all Wall Street spokesman and their views, no one gets the kid-gloves treatment of softball questions as does Buffett.

    Just once when he provides his observations that ‘moving in and out of stocks is foolish’, I‘d like someone to ask if non-billionaire ordinary investors could be expected to handle holding  through whatever comes along with the same calmness he does each time.

    If they would show a chart like this at the same time it would make the question’s relevancy clear. By my count over the last 15 years Buffett’s holdings have plunged double-digits five times, twice by roughly 50%, and have taken two to five years each time just to get back to even.

     

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    We’ve seen the statistics that clearly show that ordinary (non-billionaire) investors cannot hold through such fearful periods, and worse, hold on most of the way down and only begin pulling out of stocks near the lows.

    Of course with $50 billion or so invested Buffett can’t move in and out of stocks to avoid losses even if he wanted to. But ordinary investors can do so very simply.

    Yet the financial media continues to ignore Berkshire Hathaway’s record of pretty much moving with the market, up and down to the same degree as a market index not at all having the magic quality they help promote. 

    It terribly misleads investors who cannot handle periodic huge losses in their portfolios.

    To read my weekend newspaper column click here:  Did This Week’s Critical Economic Reports Vindicate Market’s Resilience-

    Subscribers to Street Smart Report: In addition to the charts and signals in the ‘Subscribers Premium Content’ area of his blog, the new issue of the newsletter will be available tomorrow afternoon in your secure area of the Street Smart Report website.

    Non-subscribers: We recently updated the sample newsletter to a later issue you might find interesting. Click here to view it:  Sample issue of Street Smart Report newsletter

     

    Images: Flickr (licence attribution)

    About The Author

     

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 

     

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