#$wtic

Is it the $USD or $CAD that $WTIC is best correlated to? July2014 was a pivotal point for all.... But from that point on ITZ has to side with the Canadian Dollar...although recently it has uncoupled. The Canadian dollar climbed against its U.S. counterpart on Friday, touching 14-month highs as strength in domestic retail sales offset lower oil prices, while data showed that investors have turned bullish on the currency. Canada's annual inflation rate slowed to a 20-month low of 1.0 percent in June, although core measures showed signs of strength.

About two months ago, when crude oil was crashing, the airwaves were filled with trend-followers' predictions that the price was headed for $20 a barrel. As soon as that became the prevalent opinion, Mr. Market figured it would be a good time to teach complacent short-sellers a lesson, and prices began a meaningful rally.

Now you might be surprised to learn that in a year that has been as flat as an “American Idol” singer for most asset classes and sectors, oil and energy stocks have emerged as leaders, with 10% and 5% gains ytd, respectively.

The remarkable turnaround led the analysts at TIS Group in Minneapolis to wonder about the historical record of massive crude oil price declines and their aftermath. They wanted to know the average size of the rebound from a decline of 50% or more, and the average length of time to the next peak. With that data in hand, they could make a reasonable estimate of the size and length of the current rebound.

The analysts determined that over the past three decades, crude oil has recovered 80% of its biggest declines in the subsequent rebound, as shown in the table above.

Whipping out the calculator for some elementary  statistical analysis, the TIS analysts figured that if the current rally takes on the shape of the average of its peers over the years, crude will peak on July 2 at $78.60. Mark your calendar.

Of course every smackdown and rebound has its own story and quirks, but this is not about being exact about the what and why -- it's about measuring the crowd effect, and figuring human nature is more or less always about the same.

Right now, crude oil is around $58, so it's not too hard to imagine what might make it shoot up $20, or 34%, over the next 57 days. That's roughly 35 cents a day. Short positions are quite extended right now, so a panicky squeeze could do a lot of the work. Some more bad news in the Persian Gulf or Russia could push up the geopolitical panic premium. A positive resolution on Greece could help allay fears about global growth. An upward reappraisal of U.S. and Chinese economic growth could help too.

History is not destiny, but don’t be surprised if there is a crude awakening for oil bears over the next two months.