What's Up With The Markets and In Particular Oil This Week? Nov 25
So what really is going on here?
Should we believe the talking heads that we are emerging from the old financial crisis to a new more powerful and destructive one?
Should you be running for cover at the moment?
These are all good questions that a lot of people (very smart people) are asking and answering in droves at the moment. They think they know what is going on based on the recent past and given the amount of current debt sloshing around the markets. They think something sinister is going on.
In short they might be right.
However the problem is they are using the past fifty years as a gauge on where the markets are headed. When the markets were free and the big funds were free to pull their money out once everyone else was fully invested as they are now.
Not so fast.
First of all the markets are anything but free at the moment. In short they are controlled by central banks around the world. When one big fund gets scared and starts to pull its money from the market some central bank will step in and begin buying or selling. As in the past they will have companies sell more of their stock or buy more of their shares back. It is that simple. The buyer and seller equilibrium will be maintained and this by itself will help keep the markets where they want them.
You can see the oil chart below and it looks kind of scary doesn't it. Like a mini crash. I must admit that even I did not see it falling to this level so quickly but well, it has.
Why?
For a number of reasons but the best one I can think of is this is where the government wants it. That could be because they are trying to see what more disposable income around the holidays will do for people. They could be trying out a sort of universal income based on oil. There could be some new technology that they want people to start using, like electric cars. There could be heavy and large longs that they are looking to shake out of the markets from the 77 level (where we went short). The list is long and the possibilities are endless. Price never has made any sense even though there are those that would have you believe that price rises and falls based on supply and demand. This simply is not true with oil. Nor has it ever been true.
If you look closely at the Dow chart which is the same one I put on here before there is still no crisis unfolding at all. You can see the technicals as well as I can. Do you see panic yet?
Neither do I.
If the oil and stock markets were correlated in any way then stocks would be down almost 35% at the moment. Are they?
Not even close.
Could they suddenly collapse and catch up to Oil?
I suppose but not very likely. That is not how the markets work at the present. You have to remember there is always a buyer now. What that means is price is artificially manipulated.
You could say that this too is another tool to be used for "Universal Basic Income". In a sense it is. However most of the cash goes to those most heavily invested which is the wealthy.
You can see that we are at major volume levels at the 50 dollar per barrel level that go back to 2014. Yep most of the gains of the past eight to ten years have been wiped out if you were holding that long.
This could be the area that the Fed holds oil for a while. Between the 45 and 55 level. So be aware. Anyway I will keep you posted. If you are going to try a long this is a very powerful place to try it. Cheers! A trade idea might be Long here at the 50.74 area with a stop below 45 and see if you can get to 55. 1:1 so not a great trade.
Should we believe the talking heads that we are emerging from the old financial crisis to a new more powerful and destructive one?
Should you be running for cover at the moment?
These are all good questions that a lot of people (very smart people) are asking and answering in droves at the moment. They think they know what is going on based on the recent past and given the amount of current debt sloshing around the markets. They think something sinister is going on.
In short they might be right.
However the problem is they are using the past fifty years as a gauge on where the markets are headed. When the markets were free and the big funds were free to pull their money out once everyone else was fully invested as they are now.
Not so fast.
First of all the markets are anything but free at the moment. In short they are controlled by central banks around the world. When one big fund gets scared and starts to pull its money from the market some central bank will step in and begin buying or selling. As in the past they will have companies sell more of their stock or buy more of their shares back. It is that simple. The buyer and seller equilibrium will be maintained and this by itself will help keep the markets where they want them.
You can see the oil chart below and it looks kind of scary doesn't it. Like a mini crash. I must admit that even I did not see it falling to this level so quickly but well, it has.
Why?
For a number of reasons but the best one I can think of is this is where the government wants it. That could be because they are trying to see what more disposable income around the holidays will do for people. They could be trying out a sort of universal income based on oil. There could be some new technology that they want people to start using, like electric cars. There could be heavy and large longs that they are looking to shake out of the markets from the 77 level (where we went short). The list is long and the possibilities are endless. Price never has made any sense even though there are those that would have you believe that price rises and falls based on supply and demand. This simply is not true with oil. Nor has it ever been true.
If you look closely at the Dow chart which is the same one I put on here before there is still no crisis unfolding at all. You can see the technicals as well as I can. Do you see panic yet?
Neither do I.
If the oil and stock markets were correlated in any way then stocks would be down almost 35% at the moment. Are they?
Not even close.
Could they suddenly collapse and catch up to Oil?
I suppose but not very likely. That is not how the markets work at the present. You have to remember there is always a buyer now. What that means is price is artificially manipulated.
You could say that this too is another tool to be used for "Universal Basic Income". In a sense it is. However most of the cash goes to those most heavily invested which is the wealthy.
You can see that we are at major volume levels at the 50 dollar per barrel level that go back to 2014. Yep most of the gains of the past eight to ten years have been wiped out if you were holding that long.
This could be the area that the Fed holds oil for a while. Between the 45 and 55 level. So be aware. Anyway I will keep you posted. If you are going to try a long this is a very powerful place to try it. Cheers! A trade idea might be Long here at the 50.74 area with a stop below 45 and see if you can get to 55. 1:1 so not a great trade.
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