Parabolic Move In Crude Oil Is Looking Extended

This is a bit of a stretch but a comparison of the current price of Crude oil futures and the Dow Industrials from 1987 would indicate that crude is getting a bit extended. 

The following shows a daily chart of crude oil futures hitting a DeMark Sequential 13 count.  After an already strong run higher, Crude has gone parabolic in the past two weeks.  This type of advance is not sustainable and often leads to a price collapse. 

Dm_cl1_daily_051208

The Dow Industrials in 1987 traced out a similar parabolic pattern on the final run to the highs and began rolling over shortly after hitting a DeMark 13. 

Dm_indu_daily_1987

In addition, the following chart indicates that the weekly chart of crude futures have also hit a DeMark 13, although the price has run a bit further than I would like. 

Dm_cl1_weekly_051108

All in all, it looks like crude could begin a multi-week process of rolling over after its astounding run.  If you bet against crude, remember to use a reasonable stop ore wait until price breaks down.  Parabolic moves can often run much further than you imagine. 

3 thoughts on “Parabolic Move In Crude Oil Is Looking Extended”

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