Weekly Commentary for April 12, 2011

Lesson #1: Commodity prices can rise sharply.
Lesson #2: Commodity prices can fall sharply.

July 11 2008: Crude trades at $147
July 18 2008: Crude closes at $129
This was a quintuple-bottom break. Bad.

Two WEEKS after reaching $147:
July 29 2008: Crude trades at $120
This was also a support line break. Important!

Then, just over a month later:
September 2, 2008: Crude trades at $106
September 16, 2008: Crude trades at $91
The price of crude was sliced by one-third in 60 days

Two months later:
October 16, 2008: Crude trades at $70
Crude gets sliced in half in roughly 90 days.

If you are relying on a blog post for specific investment advice, you are making a huge mistake. Please speak with an investment adviser before making ANY investment decisions.

If you do not have an investment adviser, we encourage you to contact Mullooly Asset Management at 732-223-9000, or through our website.

Under no circumstances should the content discussed on this post be considered specific investment advice.

And it’s not just oil. Even gold, which (to some) never goes down, dropped from a shade over $1000 in March 2008 to six months later (October 2008) gold was bouncing around $700.

Commodities can zig and zag (quickly) because (unlike stocks) there is no dividend, which keeps some people invested. Also unlike stocks, there will never be earnings reports which could drive prices up or down. There are also very few “fundamental” analysts talking about commodities.

Especially with commodities …when the charts change, we MUST change.