We’ve been monitoring crude prices closely, since they could conceivably provide a more timely warning of war in the Middle East than the headlines. Quotes are pushing into our red zone now, trading around $106 for the NYMEX March, and it seems doubtful this could be related to financial strains on Europe. Yesterday’s spike brought the March futures to within one cent of a $106.06 target (see inset) that has been two weeks in coming. Given the importance of this Hidden Pivot resistance – and of another at 106.34 that has been more than two months in coming — we should expect to see evidence of some real stopping power precisely at these levels. Under the circumstances, if the pivots appear to give way easily today, the move would start seeming less like noise and more like a possible harbinger of an Israeli strike against Iran’s nuclear-weapons facilities. (Note: A breakout would augur a move up to at least 120.18, basis the April contract, according to calculations done Tuesday night by Doug ‘harry’ McLagan.)
For investors, it will be impossible to predict what events that might set in motion, but it surely has the potential to more than merely shake the geopolitical and economic ground. Since Gold has been moving up strongly as well, we should infer that it will continue to do so, driven by the same forces — whatever they are — that are pushing crude higher.