My February 2 post pointed to lower oil prices. Oil fell through the month of March, seasonally the second strongest month in any year, second only to April. In the few years that oil has fallen in March, the probability that oil will decline in April is increased. The original downside price objectives in the $30-$40 range have been exceeded. Below, we see the same monthly cycle that has successfully projected the decline. Note that it does not bottom until the autumn. The autumn price target of $23 has been exceeded. The last two downside targets are $17 and $11 per barrel. These levels are due by October-November.
This monthly cycle has been an accurate harbinger of lower oil prices.
Cycles Research Investments LLC
The bear market is reflected in the equity market. Below we see the relative strength of the Energy Select Sector SPDR Fund (XLE). Note that it peaked in 2008. If a stock, group, or sector is going to enter a period of outperformance, the relative strength line usually does not make a new low for at least six months. The sector made a new low last week, so we will likely not see an investable low soon.
Energy stocks continue to underperform.
Cycles Research Investments LLC Source