After four months of chopping sideways, crude oil is enjoying what traders call a "breakout."Breakouts are one of the pillars of common-sense chart analysis. A breakout is simply when an asset makes a new high for a given time period. It can be a short period, like two weeks... or longer period, like six months. The "Turtle Trading" method is famous for making billions of dollars with breakouts (read our friend Michael Covel's site for a lot of great info on the subject).
After watching oil suffer a huge decline in 2008, we noted how the fuel built a "floor" around $38 in February. We then noted its bullish breakout in March... a breakout that resulted in huge gains for many oil stocks. And this week, we must note that oil just broke out to a new yearly high above $75.
We can't know how far this breakout will take oil. It could run to $80... $100... or, as Jim Rogers says, $200 per barrel. But we can note that oil "wants" to go higher right now. We can also brush up on oil-service names, Canadian oil sands producers, and energy-focused denizens of the Canadian Venture Index. A $20 move in oil will result in major gains here.
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