Oil and the CRB Approaching a Final Bottom
Once the midpoint consolidation gives way, the final plunge usually lasts three to five days.
Sentiment has reached levels similar to the last three-year cycle low in 2009.
(Chart courtesy of sentimentrader.com)
At this point we are just waiting for the oil cycle to bottom. Today is the 51st day of oil's intermediate cycle, which generally runs 50-70 days on average. I think oil is going to bottom in the next three to five days, the reason being that oil is in a waterfall decline that has just formed a midpoint consolidation. Once the midpoint consolidation gives way the final plunge usually lasts three to five days. This should correspond with a dead cat bounce in the US dollar index before it rolls over and heads down into an intermediate bottom sometime in the next four to eight weeks.
During this final plunge it appears gold will move down into a daily cycle low. That low should hold above $1,526 as I think gold already formed its yearly cycle low back in May, slightly ahead of the stock market and the CRB.
Sometime in the next few days investors will get the single best buying opportunity in commodity markets for the coming inflationary period. I prefer the precious metals (more specifically, mining stocks) as they have already indicated they are going to lead this next leg in the commodity bull, but I think investors will generate tremendous returns in almost any area of the commodity sector.
One to watch is natural gas. It might be the largest percentage gainer during the next two years as it has gotten beaten up more severely than almost any other commodity.
Editor's Note: Toby Connor is the author of Gold Scents, a financial blog with a special emphasis on the gold secular bull market.
Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.