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April 14, 2014

Dollar In, Oil Out

One of the problems of performing cycle analysis on continuous contract charts is the effect of contango and backwardation on the analysis of important pivot points. Within our group of usual suspects, this problem is most noticeable on oil, which often sports significant backwardation month-to month. For example, the roll from the May to the June contract is -$0.84 as I type. This problem is not new... I mentioned the issue years ago when introducing my cycle techniques... and should be kept in mind when judging failed cycles and setting cycle rally expectations. Let's look at a specific example ...


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