Oil's Fall Looks Far From Done

Next stop on the downside, barring a miracle, will be the 2007 low near $50, which would complete a broad first failure pattern. That decline would denote a 100% retracement to the last major low after a major top. Notably, this targeting uses the same pattern recognition scheme I applied when talking about Dow 7000 in a recent column.

Oil Services HOLDRs (OIH)

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Source: eSignal

The Oil Services HOLDRs (ETF - commentary - Cramer's Take) paints an even darker picture than the crude oil futures contract. The fund entered the last phase of its powerful rally in September 2006, a few months ahead of the underlying commodity. It topped out at the same time, in July of this year, but has sold off with even greater fury.

The fund crushed the two-year low when the equity indices sold off earlier this month, coming to rest more than 30 points below that level. To put things into perspective, it finally bounced within the trading range of the day it came public in February 2001. So its net return since that time is 0%, despite the biggest oil boom in history.

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