Brent Crude Oil traded on ICE Futures Europe has rallied 6.7% on back to back 'trend day' rallies on Tuesday and Wednesday. These two 'big' rallies come after the market trended down the previous 10 days losing value on seven of them. Though oil has bounced back off the dip, don’t expect it to last long.
Q: How has Brent crude oil responded to back to back 'trend day' rallies coupled with back to back 'big' gains while trading in the 4th quarter?
A: According to the seven previous occurrences of this event omitting any repeat occurrences within 10 trading days, EventEdge® indicates that Brent crude has shown a strong bearish edge that peaks eight trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the most recent occurrence of the event (Wednesday, Dec. 12, 2007) is Monday, Dec. 24, 2007.
Brent crude oil declines in 86% of the cases (6 of 7) by an average of 5.4% relative to the close on the event date. The average of the one rally is 0.3%. The overall return of the seven cases is -4.6%, which, based on the close on the event date ($94.02), provides a target price of $89.7.
If you would like to see more details of this historical edge, go to www.markethistory.com
Mickey Schoenhals is an analyst with Markethistory.com.
