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Tuesday, December 6, 2011

Oil At 100= Blame the Speculators

 We did have another rumored Euro bailout today, and it was good for an afternoon rally, but the market is catching on to the rumor BS and sold off going into the close. Volume is dropping off to pre holiday levels, which will probably be with us for the rest of the month. The bias on puny volume is normally up, as it will be mostly day traders and computers bumping up prices to scalp a penny, but we should not have wither a dramatic rally or a dramatic drop, barring World War 3 (which is looking more possible with each passing day). My original target of 1350 now looks quite optimistic, but 1300 is pretty reasonable.
Oil has broke the 100 barrier again, and now appears to be in the range 95-105, but with a weakening MACD, indicating we are probably in for another pullback. We will see how strong this is if it retests 95 and bounces back up quickly. I saw a headline on Yahoo finance today that said, "It's time to start freaking out about oil prices". No, that time was a few year ago. I think we have just about blown any chance of making the tranition off oil painless, we are probably infor a few years of stagnant, if not negative, economic growth, because, without an alternate source of energy, we are stuck with this. 

I tappears we are near the completion of a symmetrical triangle on gold, which means we are likely very close to a big move coming, While we can't predict the direction, the most probable is in the direction of the prior trend. That would be up.

 The prior trend in treasury yields is down, but it's hard to see how much lower these can go. The bond guys are pretty smart, and it does not appear that they have been buying  into all the BS rumors that have been floated in the past few months. 
I retrieved this chart two hours after the market closed and it still isn't updated, but as you can see the general trend is still up. We are getting a crossover in MACD, so we may get a pullback here, but that middle pivot point may just hold, and lead to another move up. That will, of course, cause oil to drop, leading our leaders to believe the "crisis is over", and lead to another round of oil production shout downs. Wash, rinse, repeat.

The market typically rallies, if somewhat tepidly, in December, and this one will probably not be any different. January will probably be a very different story, but that is too far in the future for me to worry about now.

I will have the new highs update shortly.

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