My Prediction For Oil

  • November 2, 2004
  • Mark Melin


Monday Recap:
On
Monday, the cash Dow moved lower, tested support and then shot higher, moving
above the 10050 level.  The market then backed and filled, consolidating for the
balance of the day to end at 10054. 



While the
Dow was up today, Merck continued to slide.  I’m going to watch support in Merck
just above 26.  If that is broken and holds, we could see a move below 20 in the
embattled drug stock.



Holding
up the Dow was sliding oil.  You will recall that about a week ago we called a
top in oil and said that the black gold would likely move to fill its gap.  That
has occurred.  Ultimately I think oil could move into the 40s — and potentially
below within the next 5 months. 




Prediction for Tuesday:  I think the markets could edge higher on Tuesday.  On
the downside, we’ll watch the 10050 level, then again downtrend chart support
near 10025 and chart support near 10,000.  With the election looming, its not so
much a matter of who is going to win but if there is a clear winner.  A clear
winner would likely trigger a buy signal — Bush a buy trigger to a greater
extent than Kerry.  This would likely start an upleg in the cash Dow that could
take the market’s measure up to test the downtrend channel just above 10200 —
which could be broken before year end.  If we don’t have a clear election
winner, watch for a potential market sell-off — and this could provide a buying
opportunity.

Mark Melin