It was a big day for the oil sector yesterday for not only did oil itself break out of its downtrend in force since early June, but the oil stocks index broke out of a Head-and-Shoulders bottom at the same time.

On the latest 6-month chart for Light Crude we can clearly see the breakout from the downtrend. This breakout had been telegraphed for some time by the strong Accumulation line, downside momentum dropping out (MACD), by the downtrend in its later stages morphing into a bullish Falling Wedge, and not least by the improvement in the oil stocks index as it moved to complete a Head-and-Shoulders bottom. Now that it has broken out it could be on its way back to its March and June highs despite the atrophying economy, due to geopolitical and supply chain factors – and it could go even higher.

On the 6-month chart for the oil stocks index we can see how, after completing a Head-and-Shoulders bottom that had been building out since mid-June, it made a clear breakout yesterday. The recent performance of oil stocks presaged a breakout by oil itself and as we have just seen, oil broke out of its downtrend yesterday. It should now proceed to advance to a minimum target at its June highs.

The outlook for the oil sector over the médium-term thus looks bright, and this will probably “rub off” on the beaten down Precious Metals sector, with silver and silver investments looking outstandingly attractive here.

What all this implies of course is that the Fed and other Central Banks notably the ECB will wade in with more newly created money to shore up, for now, the embattled debt market, which is drawing ever closer to a catastrophic implosion as debt saturation approaches.

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