Get ready to pay more at the pump.
Gas prices look to be turning higher after a brief pullback in the uptrend that began last summer.
We’re heading into the summer driving season and that means higher gas prices. Multiple historical studies, including my own, show that gasoline has a seasonal tendency to rise between February and May.
Between 2000 and 2004, the average monthly increase in wholesale gas prices was about 9 cents a gallon. Yet from February to May prices increases were 14 cents, 17.2 cents, 12.8 cents and 13.4 cents per gallon… well above average.
This is the type of research I shared with subscribers to my trading service, Cycle 9 Alert, at the end of January when I put them in an energy play in the market’s strongest sector. We’ll soon be opening enrollment to this service… so stay tuned.
For our purposes today though, let’s look at where I see gasoline prices headed over the next few months. Here’s a chart of RBOB gasoline futures:
This market has been in a strong uptrend since last June (marked by the vertical line on the left side of the chart). The rally stalled out about a month ago, with prices just under $3.40. After pulling back to the 50% Fibonacci retracement level, and a significant zone of support just above $3.00 (see green lines above), I see prices making another leg up.
Traders gave us a pretty good clue as to the importance of this level…