Oil on a 25mth cyclical bull run. Update 9 - US Dollar weakness and a possible oil spike above $100.00

If the US dollar is sold other asset classes are sought, you don't hold a weakening asset like the US dollar you then look at other, say more sought after assets and you buy. Oil is one of those sought after assets as opposed to holding a depreciating USD . Every 25mths oil begins a cyclical bull run. The last run had oil top $147 (July 2008) a barrel just before the US economy attempted to go into a de-leveraging cycle. But, as every trader, commentator, economist and person in the street knows that the Federal Reserve lead by the Ben Bernanke enjoys printing money, in fact obsessively. When he prints via purchases of long dated US Treasuries, or allows Wall Street to dump toxic Mortgage Back Securities (MBS's) and the even more toxic Commercial Mortgage back securities (CMBS's) onto the Feds balance sheet, he prints some more into the Wall Street banking system. Which either absorbs the liquidity (cash) into asset deprecating black-holes (banks/investments banks held off balance sheets writedowns) or is used via trading desks, sent to hedge funds to trade into High Frequency Trades (HFT) and/or pay cheques for the top tier management. Point is, when the money is disbursed/printed in that way and ends up in the minority of the American economy, it still removes confidence in the US dollar. That if allowed to weaken as dramatically has it has, money is sent elsewhere.

Until we get a second attempt an economic de-leveraging in the US and this time I suspect it will be more so a banking/liquidity crisis (or meltdown) with the epicenter being Wall Street again. It may just be a tad more chaotic. Depending on that future scenario and the severity attached, in which the US dollar will be bid on risk aversion. Oil is still an inflation or dollar depreciating hedge and it's a good one.

It will be worth noting that the beginning of a wider divergence in October 1st 2010 with oil @$81 and the USD @$78 could the a precursor of a spike in the oil price, the relative aspect is if the USD collapses to 0.73 as it did in July 2008, it sent the oil price to$147. An extreme diverged relationship when the USD has total weakness, therefor a spike in oil prices above $100 within a 25mth period cannot be ruled out

The moving averages MAE @77, AMA @79, TMA @76, SMA @77 are all showing a price stability as it holds in the range of 76, 79. With supports @65 and @50

Moving averages prior in a lead up to the oil spike in February 2008 were between 71 and 86 as increased volatility occurred prior to the oil price spike.

(Overlay line is the USD)