Although crude prices eased somewhat last week, the 107.94 target I posted here remains viable. In the previous analysis, I sketched a hypothetical correction down to around $91 to make a retracement possibility visually evident; however, the new graph (see inset) allows for an even more substantial pullback into the high 80s. It is important that we get this right, since investors are more raptly focused on energy prices at the moment than on whatever the Fed intends. This is logical, since higher prices are pulling up rates rather than the other way around.
I’d suggest favoring charts heavily over expert analysis, since the supply-and-demand picture is too complex to yield tradeable conclusions. A pointillist approach attempted at ZeroHedge over the weekend produced a bewildering range of possibilities, among which even the most significant — China’s supposed need to rebuild strategic reserves — is unknowable. There are in fact so many ‘unknowables’ that an economically significant easing of crude prices would appear to be the least likely scenario of all. In the meantime, Wall Street has contrived to ignore this in order to facilitate the distribution of stocks ahead of MAGA’s coming Waterloo in November. Although the buy-the-dips bozos have enjoyed a long and lucrative ride, the time has finally arrived for bears to short into strength on the opening bell with the same devil-may-care attitude.