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INVESTMENT STRATEGY – ALL EYES ON CRUDE OIL

With Crude Oil prices currently just below $60 per barrel, investors are well advised to keep an eye on its price.

This is the lowest price for Crude Oil since the summer of 2009.

Crude Oil is a critical component to our economy and of the economy of the world. It impacts energy costs such as gasoline and diesel fuel and it is the basic ingredient for the production of plastics, fertilizers, synthetic fibers, dyes, paint, detergent, photographic film, medicine, make-up and candles.

And, the impact lower Crude prices is also reflected in most stock indices as the large oil companies are major components of the Dow and the S&P 500.

To add to the importance of Crude Oil and why it is one of the major components of The Investment Compass™, there are the implications for the Russian ruble.

As can be seen on the point-and-figure chart seen below, Crude Oil has been in a free-fall since the beginning of November.

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There is no support seen in the time frame of the chart to the left, which only goes back to mid-2012, however, as I mentioned earlier, there is support at its current price, $57-59, which was the price back in 2009. Below that range, support is in the mid-$40s and below that in the low $30s range.

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So, if this $57-59 range does not hold, even lower prices can be expected, and, as a matter of fact, as one looks at the chart below (Dec 15 – just two business days after the chart shown earlier) we observe that the price did go through $57, dropping to below $56.

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See the latest chart on Crude which shows the new column of Xs added – 12/17/14.

As you can see, buyers have come back into this market.

Here at The Investment Compass™ we do not concern ourselves with “why” an event is taking place – like: “Why is Crude Oil going down in price so dramatically?”

If we watch the newspapers or watch television, we are given many reasons why Crude Oil is going down. In fact, we are given so many reasons, the whole issue only gets even more confusing.

The REAL answer to why the price of Crude is dropping is that there are more sellers than buyers – nothing more than that – simple as that!

And, the question we should be asking is – “How low will it go?” – which relates to that question and the purpose of this blog.

Terry J Atzen at The Investment Compass™ (www.theinvestmentcompass.com)