Market-Watchers, Beware the Pump!

A huge spike in gas prices likely will hit before month's end

   

Market-Watchers, Beware the Pump!

The market remains in scary — and soon-to-be very turbulent — waters. But if you are looking for rising prices, just head down to your local gas station, because that’s the one thing that looks like it’s headed to the moon!

There’s an ascending triangle going on in gasoline. If you go back to 2010, it has been coiling and coiling and coiling, and it has now flipped back to a bullish trend reversal.

ascendingtriangle Market Watchers, Beware the Pump!

If you’re long unleaded gasoline, this could be a very bullish sign. Even if you were to look at on the weekly, you can see it’s on fire with a new bullish trend reversal.

unleadedgasweekly Market Watchers, Beware the Pump!

Is that bullish for the market?

Unfortunately, no. Most people aren’t long unleaded gasoline — they just buy it at the pump to get from Point A to Point B. So this just ends up being like an added tax where we could be paying anywhere from $5 to $8 at the pump — possibly by Halloween.

Conversely, if you were to look at crude oil, you’ll see the opposite chart — a bearish rising wedge.

bearishrisingcrude Market Watchers, Beware the Pump!

You normally would think if unleaded gas is going up, it must be because oil is rising. That’s not what’s happening. We have oil breaking out of a rising wedge in a parabolic crack spread.

When the crack spread rises, it’s bullish for unleaded gas — the stuff you get at the pump, not the commodity. That’s great for companies like Valero Energy (NYSE:VLO) or Western Refining (NYSE:WNR), but not so good for anyone in the human race that actually has to consume what they refine. The bottom line is that part of the reason the market isn’t looking so good is that it’s factoring in the prices for what is going to happen with unleaded gas.

Some people would probably disagree, but something both bulls and bears can agree on is that if you’re paying $5, $6 or $7 at the pump … that’s not bullish for the small-caps, mid-caps or the general economy.


Article printed from InvestorPlace Media, http://investorplace.com/2012/10/market-watchers-beware-the-pump-unleaded-gas/.

©2014 InvestorPlace Media, LLC

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