Monday, August 29, 2005

Crude Oil at 9am ET

I thought you might like to see an updated hourly chart of October crude oil futures before pit trading starts in New York today.

The market surged to 70.80 just after electronic trading began last night. This was the immediate response to the hurricane Katrina news - this storm is expected to cause major damage to New Orleans and the Gulf coast - including oil production and refining facilities.

My inclination is always to fade news that sends the market to important support or resistance levels and this instance is no exception. As you can see from the chart the market has reached the top of its long term box as well as the top of its short term box. (Ignore the big price bar at the left of the chart - this resulted from a garbled electronic tranmission of price data.)

I think the market is at a decisive long term turning point for other reasons as well. Among them are excessive levels of bullish sentiment as manifest in recent cover stories in the New York Times and in The Economist magazine.

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