10 thoughts on “CHARTS OF THE DAY

    1. gary Post author

      It looks like oil has entered the blood bath phase. They typically last 5-10 days and do a lot of damage. But they also tend to rebound pretty quickly once the bloodbath is over.

  1. jj

    Gary a 5-10 day washout in play fair enough….overall trend in play is lower oil for many reasons. Oil could be $35 this time next year purely on the US$ strength as the Euro$ and $Yen continue to be devalued by monetary policies. Oil’s run from $85 to $147 was mainly a currency reaction as the US$ fell a full 12 cents.

    The Weekly chart of the CRB index gives a better long term picture as the key 2012 summer lows of 266 has been broken setting up a key level test at the 245 area the 2010 lows and if that fails to hold as the US$ in the back ground continues to climb then 228 will be in play suggesting 200 could well be THE low….all the US$ index would have to do is head for 100 a trend that’s very possible as the other major currencies continue to devalue.

    Since the US$ bottomed at the end of June its rise of almost 10 cents has taken the CRB down 60pips, Oil down 40% and gold down $180….do the % math as to where gold, oil and the CRB index will be when the $ hits 100….sub $1000 will be in play no doubt!………..jj

  2. stewie

    You guys are too bearish. Saying oil is going to 50 is same talk when ppl were saying silver is going to 200 when it was near 45. Both statement are false. Because everyone is now bearish on oil it will bounce up. RSI on WTIC is already at 10. It will bounce up on Monday. There is no way oil will hit 5 on rsi or even 2 with 5 days of bloodbath. The blood bath has already happened. Watch oil and metals be big in green on Monday


  3. Roy

    Maybe so, Stewie. I don’t know any secrets. But I know you buy strength, and right now the strength is in the broad market, not the commodities. Granted that the S&P will enter a bear market someday, and the commodities will enter a raging bull. For sure. Some day. But until that day happens, it hasn’t happened. And it hasn’t yet.

    The Fed has kept the broad market inflated for some time now. Someone has successfully been attacking gold for some time now. The massive new supply of oil and gas coming on line has been pushing down on price for some time now. I don’t see any of those trends reversing on Monday. A bounce in commods on Monday? Why not. A short pull back in the market? Sure. But real trend reversals? The things that everyone here is hoping to catch right at the bottom and ride to the top? I don’t see it yet.

    I see the sentiment extremes and I see the possibilities, but I see no signs of the actual trend change happening yet. We are talking about a huge, multi-year trend. When it happens, there will plenty of time to get on board. Catching the very day of the low is only good for pennies and ego, and stopping out a dozen times trying to catch it is bad for the account. I’m on the sidelines until I see the trend change. Not to be confused with “seeing the signs that it should change soon”. This is the market… things that shouldn’t happen happen all the time, and things that should happen frequently fail to materialize.

    1. gary Post author

      Sometimes it’s hard to tell when the trend has changed. The trend in gold clearly turned back up but then we got thrown one heck of a curveball on Friday.

  4. Bob UK

    Oil went down to the 40s in 2009 and it would not surprise me if it happened again in early 2015.

    The Saudis do not lower their oil price and/or cut/raise production randomly. They put a lot of consideration into which position to make and then they choose it. Their recent oil price cut is not something that they will simply turn around and change next week or next month. I think, at a minimum, they will keep their price cut, and their production levels as stated at the OPEC meeting last week, where they are now for the next 3 months at least.

    There is some geo-political ‘thing’ going on here. The most obvious answer is that the Saudis are seeing an opportunity to get rid of one of their most hated enemies in their region – Assad of Syria. Putting pressure on oil prices may be, as many have discussed, some plan between the US and the Saudis to hit Russia – who also just happens to be the only country keeping Assad going – as hitting Putin in the pocket economically is obviously the West’s only plan to hit back at him over Ukraine.

    If the game is to finish off Assad and/or to squeeze Putin then they – the Saudis and the US – will be keeping the pressure on having a low oil price for many months to come. Maybe even years. They are not going to start this and then, before it is finished, simply change their minds again. It is economic warfare. Yes, it hits US shale producers but the plus side, for the US Government, is that it might stimulate the wider US economy. Which is more important for the US?

    Or it could simply be that the global economy is contracting and doing that much feared thing – deflating

    Hence why I can’t see how any technicals in charts really matter now as the oil price is being governed by geo-political decisions.

    Don’t forget, the last time the Saudis cut the price of oil out of the blue – in the 1980s – it resulted in an oil price decline for several years. Heck, the last time the Saudis cut the oil price in this way it even featured in the TV series ‘Dallas’ with storylines about the oil companies of the Ewing family and Barnes-Wentworth going bust overnight. (Yes, I am old enough to remember that.).

    Yes, we might get some bounce in the likes of USO and others this coming week but surely that will just be knife-catching in a declining market? What is going to make oil bounce back up 10 or 20 bucks in the short-term? The only thing that I can see doing that is the Cold War between the West and Russia suddenly going hot.

    My main interest is more in how the price of oil affects the price of gold?

    If oil continues to fall what affect does it have on gold and silver? Will all commodities fall in price along with oil or is it possible – I don’t know the answer btw – that gold and silver could go up whilst oil is going down?

    What I do think happens though is that Gary’s bubble phase in the US stock-market continues and we get a big Christmas Santa rally now. For me, here in the UK, with the Pound now much weaker against the USD than earlier in the year it is painful to invest in US equities but, frankly, I can see the US markets going higher and also the Dollar getting stronger in the weeks to come.

    Apologies, did not mean to turn this into an essay. Just whittering out loud. What do I know? 🙂

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