India, US, Gold, Oil

Alchemist · #1 21st May 2008, 12:50 AM

For a change, lets make a single post for all markets that matter the most to Indians.

For Sensex, I already have a thread here.

Most of you must have become familiar with the long-term trendline that I have drawn for the Sensex.

The index made two failed attempts to cross it. Things don't look good.

Long back, I had posted a chart for Dow Jones Industrial Average in this thread.

DJIA chart was highlighting a Head and Shoulders pattern.

The DJIA has gone all the way back to the neckline and failed to cross it twice.

Another bad omen.

Crude oil has broken above its critical resistance level of 125. God knows where it is headed now.

On the other hand, the gold rally is losing its steam.

Gold is usually considered an inflation hedge, so its sluggishness is surprising.

The only reason that I can think of for this diversion in gold and crude oil prices is that maybe

this crude oil bull market is entering its last stage of hyper-speculation.

Traders know about the reasons and consequences of such a rally. Thus, the amount of interest in gold has become subdued.

It doesn't make much sense to speculate where this final leg of oil-rally will end, but it can be pretty violent.

I won't rule out $200 per barrel in next few weeks or months.

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Here is a combined chart of Crude Oil and Gold.

Note the diversion shown by the two yellow lines.

vasa1 · #2 5th June 2008, 01:38 PM

This is on Yahoo! Finance:

Quote:

Thursday June 5, 1:14 am ET

Oil prices drop below $122 a barrel after US reports drop in gasoline demand

BANGKOK, Thailand (AP) -- Oil dropped below $122 a barrel Thursday in Asia, extending its decline from last month's record after the U.S. Energy Department said gasoline demand fell sharply last week.

In its weekly inventory report, the department's Energy Information Administration said U.S. demand for gasoline dipped 1.4 percent over the last four weeks. Meanwhile, gasoline inventories rose by 2.9 million barrels last week, more than three times the increase analysts polled by energy research firm Platts had expected.

Concerns about demand have helped pull oil down about 10 percent from its May 22 high of $135.09. Those concerns were exacerbated Wednesday by the EIA report and by moves by India and Malaysia to cut fuel subsidies, effectively raising their retail prices for everything from gasoline to cooking gas. Many investors believe subsidy cuts will choke off demand for fuel in the developing world.

"There's definitively smaller demand, (and) you have subsidies that are going to fall in energy consuming nations," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com. "The psychology is just changing."

At least something is happening logically.

Now if China also cuts its subsidies, we could hope for a further decline in oil & gas.