"Investors have different objectives but it's the same market for everybody. Personal views and temperaments can negatively impact a portfolio if they're not aligned with the realities of the market's condition." - Paul Thornton, Investor Boot Camp
Is the surge in oil a trap?
The oil market exploded rising 9.31% in Wednesday's session. The gain was so large and unexpected it undoubtedly stirred the bull in many investors. But are the energy markets and energy stocks buys?
The gain in oil (W.T.I.C.) was enough to clear a five day range. That's a bullish start but let's look at the condition of the oil market further.
In the chart below you can see oil is still range bound. In fact a quick view of the price action shows the single session gain is relatively insignificant. THe chart below is just six monthls long but the second chart below is three years encompassing most of the bear market period.
In the long term view of oil the market is in the context of a range approximately six months long. It's marked by the orange box. This range is part of a longer range extending back to the spring of 2015. Technically, it is part of a bottoming out process.
What comes next for oil?
The key to a consistent winning approach in managing a portfolio is to address the question "how do I know"? If the answer is speculative in nature results are inherently uncontrollable. What does the market in oil say about what's next?
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