Thursday, June 14, 2007

Oil Breakout

Finally got the updated charts. I'll repost so we don't lose the comments on the previous thread.

Oil has now broken out of the 2 1/2 month consolidation phase to the upside. Notice the double top breakout on the Point and Figure chart and the bullish price target of $80. I will be watching this closely. Author Stephen Leeb notes that when energy spikes rapidly in a year it almost always brings on a recession. If oil can get to the $85 - $90 level this summer I think the economy is going to be in trouble. This is part of the problem when central banks inflate the money supply. Eventually the extra money will find it's way into commodities. Throw in the fact that the world hasn't found a giant oil field or built a refinery in 30 years and you have the beginings of an energy shock. Stay tuned.