Crude oil and energy stocks are tricky to navigate in a situation like
this where the equities market is nearing a bull market top.
It is critical to remember that when the US stock market turns down and starts a bear market virtually all stocks and commodities will fall in value. Over the last 100 years we have seen nearly 30 bear markets. The average length of a bear market is 18 months and has an average decline of 30%.
But if we do not have those sever crisis’ then if gold and oil break below their critical support level which is the red line on the charts and a bear market in stocks start you do not want to be long stocks or commodities.
It is critical to remember that when the US stock market turns down and starts a bear market virtually all stocks and commodities will fall in value. Over the last 100 years we have seen nearly 30 bear markets. The average length of a bear market is 18 months and has an average decline of 30%.
But if we do not have those sever crisis’ then if gold and oil break below their critical support level which is the red line on the charts and a bear market in stocks start you do not want to be long stocks or commodities.
The chart below shows the line in the sand for the price of crude oil. If this level is broken with a monthly bar close below $43 per/barrel so $30-$33 will be the next stop for the oil market. It seems everyone is bullish on precious metals and have been buying like crazy.
To make it shorter, crude oil will has or will find a bottom within the next couple months. Long term the value is great, but we must be aware that if equities start a bear market it will be best close all equity positions and wait for the bear market to subside. When the time is right investing in crude oil and energy stocks which pay high dividends will generate life changing gains and an income stream. Patience is the key.
