Stock Market Panic Ahead: The Oil Chart Pattern That Signals $28 Is Coming Again Soon

Oil fell again on Friday, closing at $43.23. Investors should be very worried as odds are now favoring a fall to $28 per barrel. The reason is a head and shoulder pattern on the spot crude oil chart. A head and shoulder pattern is a bearish pattern that triggers if the neck-line is breached. Pro traders and investors know that if price violates the neck-line a calculated target can be figured out. This would give the exact downside move on oil. The calculated target is $28/barrel. The neck-line violation occurs if price gets below $42 on a daily closing basis.

Investors need to be very concerned if the head and shoulders triggers below $42/barrel, because of what it means for the stock market. Remember what happened in January when oil broke $30/barrel? It was all out panic. A move down to that level again will likely cause small/mid cap oil companies to go bankrupt and stocks could retest those lows, if not lower.