Trade the Cycles

Saturday, December 24, 2005

AMEX OIL INDEX (^XOI) Long Term Cycle High In September

Great news for gas prices and explains why they declined dramatically recently. After a great 2.5 year long term upcycle in which XOI rose from slightly above 400 to slightly below 1100 XOI's long term upcycle parabolic trendline has broken down and had both parabolic and straight trendline sell signals with 5% follow through. Notice the huge spike at the end of the cycle as typically occurs:

http://finance.yahoo.com/q/ta?s=%5EXOI&t=5y&l=off&z=l&q=b&p=&a=m26-12-9,p12,fs,w14&c=

This means that XOI should hit a long term cycle low in the next few weeks/months (it appears to be doing an EW A, B, C downcycle) and it should hit a long term cycle buy signal at about the time that gold/silver stocks hit a long term cycle high, probably this May, so I may trade oil stocks aggressively long when gold/silver stocks are correcting. XOM, Exxon, may be a good lead indicator because it hit a long term cycle low about 6 months prior to XOI and it's huge spike occurred in early 2005 about 6 months before XOI's.

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