A break for WTIC under $80 in my view is a clear warning. A warning of a deflationary collapse wave - in the style of the 2008 wide asset class sell off.
WTIC, weekly, 5yr
WTIC, monthly, 20yr
Summary
A break of WTIC under $80 in my view would lead to immediate targets of $60..possibly as low as $50 by late 2012. That would indeed be suggestive of a very strong deflationary wave across the world.
Q. What would $60/50 oil mean to the US indexes?
My best guess would be that it would equates to the sp' failing to hold the lower monthly wedge/channel line of 1100, with a decisive break under 1000. A 'panic' selling wave could easily drive the sp' into the low 900s, even 800s.
Oil might get a little bounce off $80 - with sp' flooring around 1260/50 early next week (with VIX 29/31). Yet in the weeks ahead, I strongly believe WTIC will fail to hold over $80, and I will re-state those targets listed earlier.
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It has been a long week (kinda ironic considering the holiday Monday), I hope some of my charts and meandering comments have been 'useful' to some of you..Support the site..tell your other trader friends!
Goodnight from London....have a good weekend