Since the September peak, oil has plunged to what some call a “Historic Move”. Oil has crashed many times before, so I don’t call this “Historic” at all. So far oil has hit a bottom just a bit above $45.
I had mentioned that $45-$40 could be support, but support for what? A new bull market going to the moon? I doubt it, but I sure would like to see this rally to continue for the rest of the trading year. The commercial hedgers positions are still net long but the Gold/Oil ratio was 27.52:1 this morning. This is the cheapest Gold/Oil ratio registered all year and hopefully the year-end bottom is in. We could be landing on a Minor degree bottom, from where we could expect a wild counter rally with a run back up to about $50-$55!
For those that have any doubts what a Death Cross can bring, you are seeing it now with this daily chart. It would have to be a strong rally before a “Golden Cross” might form but even then oil may be for short of a “Golden Cross” situation. I’m sure bearish traders are in a bear trap as well and that the “Buy” orders are piling up above present prices.
Yes, the oil fundamentals change like the wind with many analysts each finding a different reason why oil is crashing. If the Gold/Oil ratio hits the 27:1 brick wall for any length of time then that would also be a bullish sign! Flying and driving this holiday season can make a difference but only time will help to confirm that.
On a quick note, yesterday we had a very powerful storm come in that took out my power for over 6 hrs so my updating was curtailed. I will also take a break but will post a little to cover a few asset classes for year-end review.
Happy Holidays and Best Wishes 🙂