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Dan Dicker

Dan Dicker

Dan Dicker is a 25 year veteran of the New York Mercantile Exchange where he traded crude oil, natural gas, unleaded gasoline and heating oil…

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Bearish Markets: A Self-Fulfilling Prophecy

Oil Barrels

In my early days of trading, I had a ‘mentor’ of sorts who gave me all sorts of advice and useful tips about market action. One I remember clearly was him saying this:

“In a bullish market, all news is bullish. In a bearish one, everything will drive the market lower”.

Boy, this week proved again how incredibly right he was about that.

We’ve just had a week of the most pessimistic reaction to what should have been very bullish news for oil. Instead, we’ve seen those bullish fundamentals rewritten as bearish indicators – and watched as oil and oil stocks have sunk lower.

For example, OPEC and Russia came to a historic alliance to control supply for the next 9 months, yet the reaction was muffled. “Couldn’t they have done more?” many analysts mumbled, and the markets dropped.

As unpopular as it seemed, at least the pulling out of the Paris Climate agreement would have a positive impact on energy prices, right? No. Analysts concluded that oil companies could be hurt by the revitalization of coal – and markets tanked.

When we had two massive unexpected drops in U.S. stockpiles, they lead not to a gain in oil prices, but a surprising small loss; while yesterday’s unexpected build in stockpiles was met with a complete ROUT of oil and oil stocks.

First, Morgan Stanley and Goldman Sachs’s bearish fear was that global supply and demand wouldn’t re-balance in…

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