May Crude looks to be gathering force for a run-up to as high as 45.31 over the next 7-10 days. If so, that would have bullish implications for stocks, since the markets have been celebrating every false sign they can find that inflation is about to break out. (Note to Europe: Don’t get your hopes up.) The rally to 45.31 is not yet a done deal, since the futures have yet to break out above the 40.28 midpoint pivot associated with the target. However, if and when that happens, a pullback to p could yield a ‘mechanical’ buying opportunity with enticing odds (see inset). We’d be shooting for a minimum p2=42.79, implying the mechanical bid would be tied to a 39.44 stop-loss. _______ UPDATE (April 12, 5:01 p.m.): The futures did indeed break out — to a so-far high of 42.25 — and I heard from several subscribers who reported making hay with the very bullish forecast provided above. The 45.31 target remains viable as a minimum upside projection for the near term. This implies that the ‘secondary pivot’ at 42.79 can be used to position a mechanical bid, stop 41.95, provided you understand the rules governing ‘mechanical’ trades. If not, stay tuned to the chat room for real-time guidance from those who do. _______ UPDATE (April 13, 9:46 p.m.): Since the rally failed to reach the ‘secondary pivot’ at 42.79, our focus has shifted to p=40.28 for the mechanical trade. With an implied stop-loss at 38.60, however, I’d suggest that entry be effected via ‘camouflage’ rather than a straight bid at 40.28. This implies zooming down to the 3-minute chart or lower for a tradable pattern if and when 40.28 is touched.
