Crude

I had last commented on Crude late in January in this post here.

We had observed the range between 71 and 83 and noted how 71 was a short term bottom.

I have always felt an inclination to study more about crude after the monstrous rally it had at the end of the last bull run.Generally when crude rises, it takes everything along with- stock market and inflation included.

It is also my belief that financials and real estate lead at the start of a new bull market and generally energy and commodities are the last to rally.

So the fact that we have now broken out of the 83 level will  mean higher inflation which brings higher interest rates and that means that this bull market is on it's last few legs.

This may be surprising to a lot of people but the steep climb from last year may have taken away a few months from an otherwise typical bull market in stocks

One of the biggest memories from 2008 was the crash of Crude from levels of 148 to about 33

At the moment, we are talking only of a minor correction in stocks in the very short term, but if crude keeps exploding higher from here to about $105-$120  we may be looking at this bull in it's last breath.

Crude

I have been watching crude doing it's shenanigans for the better part of the past 3 months, where it has been gyrating between 71-83 threatening breakout and breakdown at diiferent times.

Over the past 3 days when stocks have been beaten down across the globe, crude has done very well to hold on to it's trendline support of the P'nF charts.

Take a look..

It is at a great action point from where the odds of it reversing higher are much more.However a print of 71 can change all of that.

I consider crude to be an important market measure. Quite simply, stocks will not move lower if crude is stable or exploding higher.

On watch for the next week along with the this technical level on crude would be stocks in the energy patch like Reliance, ONGC, Cairn etc.

They are compelling buys with risk easier to manage.