1. On the weekly chart, crude oil pulled back just below technical support at a confluence area of Fibonacci retracements. The Fibonacci .618 retracement as measured between the November '05 low of $55.40 and the current all-time high of $78.40 is at $64.18 while the Fibonacci .382 retracement as measured between the December '04 low of $55.40 and the current all-time high of $78.40 is at $63.83.

2. On the monthly chart, crude oil poked just below the 18-bar Moving Average which is currently at $64.13. Crude oil has dropped down to either side of the monthly 18-bar Moving Average several times over the last four and a half years but it has not actually closed the month out below it since October of 2003.

3. Since the multi-year high of $39.99 was reached in 2003, crude oil has made three major declines off of the highs before recovering and rocketing up to a new all-time high.
   
   a)   In 2003, crude oil peaked at $39.99 in February (the high for the year) and then bottomed at a low of $25.04 nine weeks later on the weekly continuous chart...a decline of $14.95.
   
   b) In 2004, crude oil peaked at an all-time high of $55.67 in October (the high for the year) and then bottomed at a low of $40.25 seven weeks later on the weekly continuous chart...a decline of $15.42.
   
   c)  In 2005, crude oil peaked at an all-time high of $70.85 in August (the high for the year) and then bottomed at a low of $55.40 eleven weeks later on the weekly continuous chart...a decline of $15.45.

The current posturing of this market is extremely similar to that of the previous three years. So far in 2006, crude oil has peaked at an all-time high of $78.40 in July (the current high for the year). As of Thursday crude oil has made a low is $63.47 on the weekly continuous chart. This has been a decline of 14.93 off of the all-time high. It has been nine weeks since that high. The current market correction is right in line with the corrections off of the yearly highs for the last three years both in price and in time. It's now or never in the crude oil market. If support fails here and crude oil breaks significantly lower and/or hits new lows later in October, it could signal that the high has been established and the bull market is over. However, the first order of business for traders should be to look for buy set-ups. We will be analyzing the market and making trade suggestions as the set-ups materialize.

Disclaimer: There is risk of loss in all commodity trading. The data contained are believed to be reliable, but have not been independently verified by Pearce Financial. Accordingly, such data cannot be guaranteed as to reliability, accuracy, or completeness, and as such are subject to change without notice. Pearce Financial will not be responsible for any indirect, compensatory, or consequential damages, including loss of profits which may result from reliance on this data. Pearce Financial and/or its Principals and employees may or may not follow strictly any or all of the trading recommendations contained herein. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.

© 2006 Pearce Financial, LLC
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