Wednesday, March 30, 2011

Crude Oil Model Remains Bullish

As we approach the end of the month, our crude oil model remains bullish. 

I first highlighted this back in January with a follow up last month.  This is a longer term strategy built on monthly data, and winning trades last almost 12 months in duration.  The current trade has been going on for 6 months.  The run up for the current trade is about 30%.  Since 1984 this strategy has yielded 14 trades, and 7 of them have had run -ups in excess of 30% with 6 of these trades running up greater than 40%.  While the past is not necessarily a predictor of future behavior, I would interpret the current bullish situation in crude as a continuance of the upward price pressure that we are currently seeing.  

Figure 1 is a monthly chart of the cash data for West Texas Intermediate crude oil. 

Figure 1. WTI/ monthly

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