Over the past three months, we've seen the West Texas Intermediate Crude Oil futures ($WTIC) rise from low of $75/barrel to a high of $102/barrel, which is a rather large move in a very short period of time in what many consider to be a modest "risk-on" environment. Certainly the other commodity complexes have no responded in such a violently higher manner. This begs the question as to what is going on fundamentally and from a sentiment point-of-view. We can't find much that is fundamentally bullish; thus we must attribute this to simply more buying than selling and the ongoing Middle East "Spring" for lack of a better descriptor.
Technically speaking, we see the monthly $WTIC chart forming a rather large bullish consolidation that suggests in the months and years ahead that $WTIC will move to new highs above the $147.27 level. If trendline resistance is clearly violated on a $WTIC move above the $115 level - then we'll be rather confident that the highs will come into view rather quickly...with the possibility of a super spike higher.
Under this premise, we should note that many of the energy-related stocks are trading in bullish patterns not far off their lows and below their representative 200-day moving average levels. This presents an interesting opportunity for oil stocks to "catch-up" to the rise in $WTIC is a very violent manner. Be prepared.
Good luck and good trading,
Richard Rhodes
