Crude downturn to continue

May 31, 2017 03:54 PM

Crude oil began a downturn last week, which is likely to continue through the first 10 days of June if you follow the Cycle Projection Oscillator (CPO).

Typically Modern Trader shares a long-term outlook from the CPO in every issue. Our June issue, which came out May 1, indicated that crude would rise marginally in April and May before topping out by the beginning of June. Almost right on cue, crude began selling off last week, and the daily CPO chart from May 30 indicates the sell-off will continue for at least another week before turning higher (see the chart below).


Similar to crude oil, the daily CPO chart for gold suggest weakness for the first part of June followed by an upswing in the middle of the month (see chart below).

The CPO shows gold slightly overbought so there is an opportunity for a short-term downtrend before the market turns higher.


In a rare case of intermarket divergence, the daily CPO is showing that natural gas may be making a significant low and ready to rally as crude oil is weakening. The CPO indicates natural gas will make a bottom around June 1 and rally for the first few weeks of June (see the chart below).

These are relatively strong signals for the CPO, but a safer play may be to sell crude and buy natural gas.

Go to to see how the CPO has done in past months.

The Cycle Projection Oscillator (CPO) is a technical tool that uses complex algorithms to filter multiple cycles from historical data, combines them and gives a graphical representation of their productive behavior. The CPO methodology employs proprietary statistical techniques to obtain cyclical information from price data. Other proprietary frequency domain techniques then are employed to obtain the cycles embedded in the price.


About the Author

John Rawlins is a former member of the CBOT with more than 30 years of experience in trading and research. He co-developed the Cycle Projection Oscillator, which has been featured in Futures and numerous research reports, with an aerospace engineer to identify the dominant cycles in a data stream and project them into the future. Reach John at @cpopro1. You can reach John at