• 4 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 7 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 11 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 15 minutes Wonders of Shale- Gas,bringing investments and jobs to the US
  • 1 min Apartheid Is Still There: Post-apartheid South Africa Is World’s Most Unequal Country
  • 3 hours Evil Awakens: Fascist Symbols And Rhetoric On Rise In Italian EU Vote
  • 1 day IMO 2020 could create fierce competition for scarce water resources
  • 3 hours Total nonsense in climate debate
  • 4 hours IRAN makes threats, rattles sabre . . . . U.S. makes threats, rattles sabre . . . . IRAQ steps up and plays the mediator. THIS ALLOWS BOTH SIDES TO "SAVE FACE". Then serious negotiations start.
  • 1 day IMO2020 To scrub or not to scrub
  • 15 hours Theresa May to Step Down
  • 1 day Devastating Sanctions: Iran and Venezuela hurting
  • 6 hours Will Canada drop Liberals, vote in Conservatives?
  • 1 day Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 7 hours Canada's Uncivil Oil War : 78% of Voters Cite *Energy* as the Top Issue
  • 3 hours Apple Boycott in China
  • 7 hours Trump needs to educate US companies and citizens on Chinese Communist Party and People's Liberation Army. This is real ECONOMIC WARFARE. To understand Chinese warfare read General Sun Tzu's "Art of War" . . . written 500 B.C.

Exaggerated Forecasts As A Contrarian Signal

When markets correct dramatically, as stocks have done since the beginning of the year, the cynical trader side of me comes out in force. I am often tempted to try to pick the bottom, but I will generally not act until I sense a shift in tone amongst the commentators in the business media. For the first 5-8 percent of the decline the usual suspects can be heard reassuring us in smooth voices…”This is just a normal correction and is, in fact, an excellent buying opportunity” they say, before listing tech, healthcare and consumer discretionary as sectors to buy on this “dip”. I don’t know why it is always those three, maybe that that is what they are taught to say at talking heads school or something, but it invariably is.

Once we reach the 8-10 percent decline area and eventually push through 10 percent as we did on Wednesday, the tone begins to change. What we hear then is that this is a “…fundamental revaluation…” or some such thing and the phrase “The decline may have further to go…” that suggests, while trying not to instill panic, that a collapse is imminent. Eventually, and this too hit the U.S news on Wednesday of this week in a report from RBS, somebody goes full on doomsday. In the RBS case the advice to customers was to “sell everything” except high quality bonds. For traders looking for an entry point that is like music to their ears.

It is not that we have definitely seen the end of the declines; it’s just that once responsible people start spouting nonsense like that and individual investors begin to panic out of their stocks, you know that some kind of a bounce is coming. That bounce, which we saw on Thursday, is no guarantee that the S&P will jump straight back up to 2100, but it enables traders to bet on that almost risk free by anticipating that initial move and then locking in a profit with a stop loss above where they bought.

That is basically what happened with me and the Energy Trader Team subscribers this week, but in the NYMini Oil Futures (QM). We had already initiated a short oil position at $33.50 with an aim to reverse to a long at about $30, as I talked about here last week. So, when I heard on Tuesday that Standard and Chartered Bank had predicted $10 oil in the near future I knew that it was time to reverse. The competition amongst analysts as to who could make the most outrageous prediction was surely over,…




Oilprice - The No. 1 Source for Oil & Energy News