Bull vs. bear has been an ongoing market battle forever, most recently manifested in equities: Is the U.S. stock market in a new bull market or just a bear market rally?
A recent survey of more than 400 TraderPlanet.com members split almost exactly evenly on that question, and there’s no way to conclude yet who will be correct. A potential head-and-shoulders top that appeared to be performing on VantagePoint stock index charts dissipated with the past week’s rally, and the Nasdaq 100 Index reached its highest point since last October’s skid to suggest the bulls may be gaining an edge.
There are other bull-bear battles going on, notably in the energy market, perhaps the key to pricing for many other markets. A VantagePoint chart of continuous crude oil futures shows a double top in June around $73 a barrel. Then crude oil futures tumbled $15 in the first two weeks of July, hitting the 50% retracement mark of the April low to June high. After falling below $60, prices have since bounced back above $60 a barrel.
Like the stock market debate, however, can the energy market continue to rally? A number of analysts, including some converted bears, think the economy is showing signs of recovery and will spark oil prices. Even the experts at Goldman Sachs are talking about setting up a long-term strategy that mentions $100 oil again. But a former U.S. government advisor is quoted as saying there will be a global surplus of 100 million barrels a day by the end of the year and oil prices will fall to $20 a barrel as the recession worsens and reduces fuel demand.
Diverse opinions are what make markets. Oil prices jump back and forth as the experts seem to be surprised by oil and gasoline stock figures in the weekly oil statistics reports, but the overall trend shows U.S. petroleum product deliveries to the market have dropped 2 million barrels per day from the peak in 2005 and inventories are at their highest levels since 1998.
In the light of those numbers, it is hard to see how short-term oil prices can sustain this latest little rally and are susceptible to falling back again to the low to mid-$50 range.
