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 1Thursday, October 15, 2009
Option Bets on $100 Oil by Year-End Jump 10%
That is this evenings headlines from Bloomberg.Bloomberg.com. I believe Goldman Sachs had a year-end target of $85. That seems more plausible. The pricing model, that I am looking at, shows targets of $81 and $84-$85 by end of Oct and first half of November. Here is the chart that also illustrates a fairlyaccurate 54 day high to high cycle that comes due around Nov 10.The time cycle is self-explanatory. Let us breakdown the pricing model which correlates the Sept 25 rallywith the July 13 rally. The July 13 rally had two legs to it. The first half of that rally exhausted on theAugust 7 NFP report, much like equities did. It sold off into Aug 17, just like equities did. Then it ralliedinto the Aug 25 consumer confidence report just like equities did. Then crude oil and equities began todiverge, for about a month, and they crude oil rejoined the stock market party following Sept 25. So, thefirst half of the pricing model targets $81 for crude oil by Oct 23. The rally thus far off the Sept 25 low incrude oil is strongly correlated to the first half of the pricing model off the July 13 low. But, what if the
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