January 17, 2016
Here are snapshots of EVERY Crude Oil Bottom
we have ever had in Crude Oil futures.
What I would suggest you note:
They ALL pretty much turn on a dime…One day they are making new lows…They will look and sound (according to the media) like they can ONLY be going much lower…and the next day they are headed almost straight back up.
A FACT: In EVERY instance when Crude bottomed, it was up AT LEAST 20% within SIX WEEKS (max).
FACT: In EVERY instance when Crude bottomed, it was up by AT LEAST 40% within 4 ½ months…and many times, MUCH faster than that.
I will also tell you that in EVERY one of those bottoms, the rhetoric and “logic” coming from the yakyak guys was EXACTLY as it is now…wherein all these nouveau commodity market “experts” who a year ago were only dreaming of Crude being forever above $100…are NOW hooting about $10-15 a barrel, citing any number of NOW bearish fundamental influences…I REPEAT: At every bottom you see on these charts, opinion was the same…”Don’t buy it here…It will get cheaper.” Those same fools (they are…their main function is to sell advertising really) will also tell you, “Oh it’s different this time. The US is an exporter now, and OPEC just can’t stop pumping…and oh yeah, China is slowing down…”, etc., etc., etc…To which I say: IT’S NOT DIFFERENT. IT NEVER IS. THE GAME IS THE SAME. IT’S JUST THE NAMES AND INFORMATION AND SUPPOSEDLY RELEVANT FACTS/FUNDAMENTALS THAT GET YAPPED ABOUT.
Again…these 9 charts represent every Crude Oil bottom we have ever had…Individually, and cumulatively, I think they are very much worth a long, slow look…
DO TAKE NOTE OF HOW FAST…HOW LONG…AND HOW MUCH IT HAS MOVED EVERY TIME…
You NEVER know what events are going to arise and influence prices, especially in the Middle East, which is now actually more unstable than I can ever remember it being...and believe me, ANY interruption in Oil production out there would still have the same MAJOR effect on prices that you see above.
The fact that this market CAN change its market value by 40% in less than a few months simply reinforces my argument that the markets ARE just a giant financial game…and believe me, the Oil business is FULL of Big Money players…which is, I believe, one reason why I think the swings ARE so dynamic…down AND up…in this market.
And if you want to buy into the idea that a world slow down is cutting into the demand for oil, go right ahead…but the following chart, updated through 2015, says differently…And I would remind you that this IS the single most important and economically pervasive commodity on the planet…and as you can see here, it took almost a complete global meltdown in 2008-09 to slow demand at all…And this is NOT going to change…More vehicles, more construction , more industry, more consumption…GLOBALLY…argue for INCREASING DEMAND FOR OIL…and if world production isn’t increasing right along with it…and it ISN’T…then I’d say it would be foolish to assume prices are going to be anywhere even NEAR the current $30 level by the time we even get to summer.
If you think China is just going to STOP, you are very much mistaken…They ARE growing. They do have 1.4 BILLION people who are becoming capitalists and consumers…And their supposed slowdown in growth is STILL moving at a PLUS 6 PERCENT…The next thing I’d point out is they ARE the world’s 2nd largest oil consumer…and if you think the following chart isn’t a definitively powerful bullish influence on oil prices, I don’t know what is.
The markets can make me look stupid sometimes but I think the Oil market is going to make total, flipping idiots out of all these people who are now fairly SCREAMING, “Oil is going lower”, and excuse me if you disagree, but frankly, if you consider yourself to be a trader, I think that NOT buying Crude Oil right now is about as dumb as it ever gets…If you are watching this market and thinking you are going to make the perfect buy at $28 or $22 or $19 or WHATEVER stupidly lower “bargain” price that you think the market is going to kindly hand to you on a platter, I’m going say you are absolutely going to be left standing at the altar. This IS the most important commodity on the planet…And in my perhaps backwards opinion , It can only going up from here…And I’d also say it’s not going to lay around and give you a nice long look at it…Every bottom in this newsletter was not at ALL like that…AGAIN, THEY ALL TURNED FROM ONE DAY TO THE NEXT…and if you think it will be different this time, what you’re saying is that the past 30 years of how this market has traded are useless…that we are in some “new” world where oil doesn’t pervade 150% of our everyday personal and industrial lives…I’ll say it again: All the Johnny-come-lately-after-the-fact bearish analysis is just typical talking head hogwash.
Here’s the long term chart…
Go back and take a look at those 9 upturns again and just ask yourself if at ANY of them, you would have found all the media opinion to be ANY different than what we are hearing now…REALLY…It is NEVER bullish at the bottom…AT ALL…and it is, from my experience, always just as stupidly, and supposedly “logically” bearish that buying just feels like financial suicide…BUT…that IS the way this game works…over and over and over.
So…Here are a few ways to do this…And not to put on a big “hurry up hype”, but I think you DO THIS NOW…I don’t think the fear factor could ever get any louder than it has been for the past 10 days…Maybe I’m dead, dead wrong but I personally started buying during the past week, and as I am of the VERY firm belief that any morning now I am going to turn on the computer and find the market already up $2-$3-$4 in the overnight/overseas trade (to just get started), I DO NOT WANT TO BE OUT OF THIS MARKET FOR A SINGLE DAY.
Here is a straight call buy…
And then there is this way to go…
My absolute premise is: This market is about to turn around. When it does, same as it has always been, it WILL minimally be up 30% to 40% within 2-3 months time…You should also note, from ALL those histories (go back and give them another look) that when Crude turns around, it tends to just go and go and go for a good 4- 6 months…AT LEAST.
There really are a number of ways to approach this idea…I’ve just listed a few…The important thing, I believe, is not so much how you do it…It’s simply that you do recognize this age old commodity situation for what it is (again), and take the risk…This ain’t Cocoa, that we can all do without…or Orange Juice…or Pork Bellies…IT’S OIL…OUTSIDE OF WATER AND THE AIR WE BREATHE, THE MOST IMPORTANT COMMODITY ON THE PLANET…such that I’ll say again that if you are a commodity trader…it’s dumb NOT to go ahead and buy it here…Maybe it’s me that’s the stupid one here, but my conviction here is exactly the same as it was with Feeders last year…FROM HERE, I DO NOT WANT TO BE OUT OF THIS TRADE.
Thanks…Pick up the phone guys…All of my energy goes into this newsletter and showing you what I think and why I do…
The author of this piece currently trades for his own account and has financial interest in the following derivative products mentioned within: Crude Oil