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Crude Oil Hurst Cycles


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#1 SilentOne

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Posted 20 May 2008 - 04:24 PM

I spent yesterday (Victoria Day here in Canada :D ) studying crude and trying to develop an analysis of where the cycles might be using Hurst methods. I picked up the count from some of airedale's past work and counted 20 week cycles off the 2003 low. The difficulty is in deciding whether these lengthy cycles work here and where do we place the 4.5 year low. Did it arrive early 2007 or is it about to approach here?

For speculators ( :) ) there is an important low approaching this summer for crude. At the very least it is heading into a 20 and 80 week low by my count. The curve ball will be whether a 4.5 year low is at hand here as well. The extent of the correction will tell all. This market is heading into a big top, and now the question is to what degree? Oil may reach a higher target in the coming days, but given the parabolic move, at some point it will reverse hard down IMHO.

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On this last chart I marked the 4.5 year low as Jan. 2007 to see what it looked like. Visually it doesn't neceesarily fit better then if it were to come this summer.
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So I have a starter position short (HGD.TO) averaged in last week. I will add at some point this week. I'm holding for the next 20 week lows, and what should be at least an 80 week low. Looking at the charts, I don't think it will be a mild affair for energy bulls.

cheers,

john

P.S. T. Boone Pickens - nice timely call on oil today.

Edited by SilentOne, 20 May 2008 - 04:27 PM.

"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#2 SilentOne

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Posted 20 May 2008 - 04:37 PM

I should add that 20, 40 and 80 week cycles are pointing down. Less clear on the larger cycles but both the 4.5 year and even possibly the 9 year could find lows this summer.
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#3 SilentOne

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Posted 20 May 2008 - 07:24 PM

Sorry should read long Horizon's Betapro oil bear HOD.TO.

http://bigcharts.mar...&mocktick=1.gif
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#4 SilentOne

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Posted 21 May 2008 - 08:27 AM

T. Boone Pickens Remains a Fervent Oil Bull

Seeking Alpha
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#5 PorkLoin

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Posted 23 May 2008 - 01:22 PM

John, thank you. I've been watching the parabolic nature of this beast too, and now that people are saying, "It'll go up forever," I'm gonna sell a few things, some of them having been held since 2000 and 2001. Harvest Energy Trust went out the door today, HTE on the NYSE and HTE/UN.TO. It's still yielding around 15% but has been sideways and down over the past three years and it's underperforming some other trusts. A couple of my favorites now are ARC, AET/UN.TO and Peyto, PEY/UN.TO. They're both very strong, have had gangbuster 2008's thus far, and I plan to hold them "forever" at this point, as long as their management continues on the good courses I see now. Natural gas finally picking itself up and getting in gear is a godsend for most of the trusts. Best, Doug

#6 SilentOne

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Posted 28 May 2008 - 08:29 AM

hi doug,

Crude has broken its run. It is on track to head into a major nest of lows. Will this be by mid-June? That would be interesting. We'll see. I added to shorts yesterday.

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cheers,

john
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain

#7 PorkLoin

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Posted 29 May 2008 - 03:09 PM

John, thanks again - it sure is setting up nicely. I hadn't traded in months but this week have really cleaned house and am ready for some major buying in the future. Doug

#8 Islander

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Posted 30 May 2008 - 12:49 PM

I just do not understand the reliance on cycles. I trade oil futures and I have not found any cycles or seasonality since about three years ago. Before that time use cycles did revolve around driving season and heating season. I think demand has leveled at about 4% secular growth. All of my statistical models, ARIMA and others, show no cycles in their output or residuals. On the other hand, production has shown a declining series. I show prices merely in slight sine wave riding the growth trend line. It is a strong upward bias. I see nothing like 90 oil for the rest of my life. Of course that might not be too long. Best, Islander.

#9 The Right Look

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Posted 04 June 2008 - 05:03 PM

SilentOne, I am also bearish mid term on oil. I think it may try and make a run back to 130 then break hard. Thought I would see what your thinking was. Thanks The Right Look

#10 SilentOne

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Posted 05 June 2008 - 09:39 AM

hi The Right Look,

For crude now we got the sell but by this count we are near a 20 week low, and possibly an 80 week low. Go figure. I covered my short position a couple of days ago.

I'm not keen on shorting it here given the stoch is doversole on the daily. There is possibly a turn here today/tomorrow which portends a bottom. So what a long here for a trade? A bounce later into June may work for a short, but I'd have to see how it reacts at this potential low.

BTW that short play was much harder than I expected.

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cheers,

john
"By the Law of Periodical Repetition, everything which has happened once must happen again and again and again-and not capriciously, but at regular periods, and each thing in its own period, not another's, and each obeying its own law ..." - Mark Twain