Coming hard on the heels of the Russell 2000 and Dow Internet index tops reported n the lat edition, now there have been a couple in energy too. Heating oil futures have been extending for three days and now WTI crude has joined in:
Like those recent signals in US stock indices, these are at a daily-scale only, with a shelf-life measured in a very few weeks, but this could be the start of something bigger. We usually warn of top extensions when they appear but then remind readers that they only mean 'the end of 'up' not necessarily 'the beginning of down'. This is explained in great detail in our user guides but basically means that prices almost always trace out some kind of 'topping' pattern after a top extension before having even a chance to fall. This time we are not so cautious and would sell short hereabouts. The reason for our boldness is the multiple signs of excess that we have reported in recent editions and it's better to book your seat on the next down train now, even if it sits at the station for a while before departing. It may leave immediately.
All signals provide by software developed by our friends at Parallax Financial Research www.pfr.com