Professor Elam

A few weeks back I commented that oil might 'poke above 75 and 80 along with stocks to new highs. '

It did just that. now a major test is under way. The important 200 week moving average is in red. 

ON the one hand, the oil market completed an A B C correction to the upside from it s $35 low. It is now

just pennies from breaking below the weekly MA, and the weekly parabolic issued a sell signal at 82. Along with the breakdown in Japan, this bears watching. Clearly markets are wondering if the Mid East will begin producing like crazy to generate funds for debt ridden Dubai World. We wonder the same thing. Support should extend down to the low 60s. 

WHile talking heads on tv worry about the higher price of gasoline lately, this actually shows the economic ability to pay for that gasoline. Lower oil prices are actually counter economic in that they represent over production or worse, the inability to pay for the oil due to depressed economic conditions. HIgh oil good economy, low oil, bad economy. That won't get me a Nobel Prize in economics as it lacks a fancy econometric model but it is about that simple.