I believe crude oil futures have bottomed.
One technique I use in doing longer-term analysis of stocks, bonds, commodities, currencies and interest rates is Moving Average Envelopes. I learned about envelopes back in the 1970s from the late Leon Brand, a talented technical analyst at Merrill Lynch.
Leon used to run a simple 12-month moving average and then add large percentage bands around the average line. For currencies, Leon used 12.5% above and 12.5% below the average line and the results were impressive. The technique may have been pioneered by Gerald Appel but Leon introduced me to it.
These wide bands can typically produce one to two signals per year -- ideal for someone with a long-term perspective (you may want to consider this for your 401(k) switches). When prices reach the upper band of the envelope it is time to take profits and perhaps short the instrument and when the lower band is reached it is a time to be a buyer. The percentage around the 12-month average line is found by empirical research -- plugging in numbers until you get an acceptable result.
Let's look at a continuation futures chart of crude oil. A continuation chart is created by linking the nearby active contract until it is about a month from expiration and then the next contract is followed or linked to create a long-term price chart. There are other ways of creating a long-term futures chart but we don't need to cover that today.
In the crude oil chart, below, we can see the up and down swings of oil trading going back to 2005. Lots of action. Crude oil goes below the bands in 2009 but it stays within the bands most of the rest of the time. The upper bands were tested late last year and that would have been the time to nail down some profits. Prices declined dramatically in recent months and the lower band has been tested.
This method does not rule out further weakness but it does identify areas that should be a good location for a long position. I am not recommending you open a futures account but I would say this may well be a good time to see what energy names are worth an investment.
The second chart, below, is a long-term view of the Dollar Index. The Dollar Index is hovering above the rising 12-month moving average line. A close below the 12-month line may start a decline for the Index toward the lower band.
A weak or weakening dollar could be supportive of crude oil prices.
Bottom-line strategy: So much on Wall Street is short term and here is a way to step back and look for longer-term opportunities.