Thursday, January 29, 2015

Watch Out, Oil Train!!!

"What's that?"
"Oh, that's the Long Oil Train!"

Oil sagged lower last night during the US market session. Don't worry, it's all good because Oil at $43.XX is "unambiguously good" for the economy, right?


Unfortunately, I don't think that lower oil is good for the economy (in the US) and I also still don't think we're done with the drop in Oil.

Jesse from The Felder Report has my same sentiments about Oil. (and he holds the same view for the Short Bonds Trade)

I also don't think that this is what fear looks like. To me, it feels like there is way too many people plowing into the oil space now since "it is definitely a no-brainer" that Oil prices cannot stay this low. Give me a nice big blow-out to massacre the leveraged longs, or an extended slow grind lower over the next few months to shake out the weak hands, and then definitely I'll be in the arena joining in on the knife catching party.

Until then though, I would be very wary on the commodity itself and all related O&G counters and their support services sector.

From a newbie that started out by shorting the US indices on and off since 2013 until now, I think I have been hit by the train enough times to give my self-recognized expert opinion of, "hey man, train."


  1. Great point, I'm not seeing the requisite fear in the oil markets needed to form a bottom just yet.

    1. Hi RetailTrader,

      Oil spiked 8% in the opposite direction I was hoping for last night. *groan*

      If it was a smaller surge, I would just dismiss it as a dead cat bounce, one of the many that has been happening to oil the past few weeks. But this huge reversal candlestick is sending a mixed signal.

      The fear isn't here, but maybe "this time will be different"? Fingers crossed for downside in the future to accumulate!


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