{"id":20772,"date":"2013-06-19T09:54:52","date_gmt":"2013-06-19T13:54:52","guid":{"rendered":"http:\/\/www.ino.com\/blog\/?p=20772"},"modified":"2013-06-19T09:54:52","modified_gmt":"2013-06-19T13:54:52","slug":"crude-oil-breakout-some-implications","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2013\/06\/crude-oil-breakout-some-implications\/","title":{"rendered":"Crude Oil Breakout &#038; Some Implications"},"content":{"rendered":"<p>At the moment, crude oil seems to be acting as a free agent instead of in concert with the commodity complex that would play a role in signaling the effects (or lack thereof) of the inflation to date.\u00a0 The target off this formation, if it holds, is 110 or so.\u00a0 But as noted in a previous post, a drive toward 110 would load a significantly higher target, which we have been charting in NFTRH over the last several weeks by monthly chart.<!--more--><\/p>\n<div class=\"wp-caption alignnone\" id=\"attachment_11170\" style=\"width: 310px;\"><a href=\"http:\/\/i1.wp.com\/biiwii.com\/wordpress\/wp-content\/uploads\/2013\/06\/wtic.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-11170 \" alt=\"wtic\" src=\"\/\/i1.wp.com\/biiwii.com\/wordpress\/wp-content\/uploads\/2013\/06\/wtic.png?resize=300%2C179\" width=\"300\" height=\"179\" \/><\/a><\/p>\n<p class=\"wp-caption-text\">WTIC daily<\/p>\n<\/div>\n<p>As the gold mining sector grinds around with gold and silver flashing a contrarian green light (based on sentiment and CoT structures) but technicals on short term caution signals, people should note that a strong rise by oil would not be good for the mining sector.\u00a0 No ifs, ands or buts unless the metals somehow manage to out perform oil.<\/p>\n<p>Could oil be part of what the gold stock sector is pricing in?\u00a0 Is it priced in already?\u00a0 We have had HUI in \u2018high risk\u2019 mode since critical support at 460 was lost late last year.\u00a0 The current technical situation in oil does not help in the risk reduction department, as energy consumption is obviously a primary cost driver for the sector.<\/p>\n<div class=\"wp-caption alignnone\" id=\"attachment_11171\" style=\"width: 310px;\"><a href=\"http:\/\/i2.wp.com\/biiwii.com\/wordpress\/wp-content\/uploads\/2013\/06\/gold.cci_.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-11171 \" alt=\"gold.cci.png\" src=\"\/\/i2.wp.com\/biiwii.com\/wordpress\/wp-content\/uploads\/2013\/06\/gold.cci_.png?resize=300%2C179\" width=\"300\" height=\"179\" \/><\/a><\/p>\n<p class=\"wp-caption-text\">Gold-CCI ratio, monthly<\/p>\n<\/div>\n<p>Yet on the big picture, we remain in an age of economic contraction as the Gold-CCI ratio has been clearly stair stepping higher since the first outwardly recognized liquidity crisis in 2008.\u00a0 This means that my personal biggest picture macro plan remains on track and a \u2018buy\u2019 by this chart.<\/p>\n<p>How to define \u2018buy\u2019?\u00a0 At this point, and considering the chart of crude oil above, that does not mean gold mining, which has not yet proven anything about a bottom, technically.\u00a0 Until it does, it is considered a push out to the future.\u00a0 If the current bottom attempt by HUI fails (a potential bottoming pattern has not yet failed), the next targets are uncomfortably lower and brutally lower, respectively.\u00a0 As has been the case since November, the sector should prove itself to investors, not the other way around.\u00a0 I will be more than happy to be bullish without the risk management when more than one (in this case, sentiment\/CoT) data point indicates as much.<\/p>\n<p>Other definitions of \u2018buy\u2019 per the Gold-CCI chart?\u00a0 We should buy persistent economic contraction, no matter how many kitchen sinks policy makers throw at the situation.\u00a0 We might buy deflation.\u00a0 We might buy deflationary liquidation followed by inflationary effects (rising prices).\u00a0 We might strongly consider buying cash, at least until it is time to deploy said cash.\u00a0 Most of all we should buy risk, as in \u2018risk not only abounds, but has been baked in by irresponsible policy maker actions seeking to leverage unpayable debt into asset market price appreciation.<\/p>\n<p>For a long while in the newsletter I have been writing that if the Gold-CCI ratio above \u2013 with its implications of economic contraction \u2013 breaks down, then our biggest picture and secular macro economic picture breaks down; i.e. policy makers win.\u00a0 But here\u2019s the thing\u2026 it has not broken down and thus they have not won out over the natural economy.<\/p>\n<p><a href=\"http:\/\/www.biiwii.com\">Biiwii.com<\/a>, <a href=\"http:\/\/biiwii.com\/wordpress\/about-nftrh\/\">Notes From the Rabbit Hole<\/a>, <a href=\"https:\/\/twitter.com\/intent\/follow?original_referer=http%3A%2F%2Fplatform.twitter.com%2Fwidgets%2Ffollow_button.1371247185.html&amp;region=follow_link&amp;screen_name=BiiwiiNFTRH&amp;tw_p=followbutton&amp;variant=2.0\">Twitter<\/a>, <a href=\"http:\/\/biiwii.com\/wordpress\/free-eletter\/\">Free eLetter<\/a><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>At the moment, crude oil seems to be acting as a free agent instead of in concert with the commodity complex that would play a role in signaling the effects (or lack thereof) of the inflation to date.\u00a0 The target off this formation, if it holds, is 110 or so.\u00a0 But as noted in a [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[1840,4273,23,4637,5247,5248,7948,4785],"class_list":["post-20772","post","type-post","status-publish","format-standard","hentry","category-general","tag-biiwiicom","tag-gary-tanashian","tag-gold","tag-gold-mining","tag-gold-sector","tag-gold-cci-ratio","tag-guest-bloggers","tag-notes-from-the-rabbit-hole"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Crude Oil Breakout &amp; 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