Ladies and gents, oil is terribly, terribly overbought at these prices -- every hedge fund and futures speculator who can buy, HAS bought and bought long. Every CEO I met at the Enercom Oil and Gas Conference in Denver this week is on the phone to their oil traders to lock in $42-$44 oil NOW and to not let this lunacy by oil speculators be missed.
This sets us up for a nasty break in prices when we are fortunate to get just a WEEK of positive news from the geopolitical front -- which could happen at ANY time.
Look at the six-year futures contract for delivery of sweet crude. This is the contract that Alan G. talked about in a recent speech about oil and the world economy. Six-year oil closed at less than $35 on Tuesday.
Any trader will tell you that when everyone is on the same side in the trading canoe, a swing back to the light side is coming.
So here’s the deal -- weakness in oil will become strength in an oversold equity market.
I can’t tell you when, but I can tell you this: When it comes, it’s going to strike like a laser-guided Tomahawk missile. And if you are NOT long a decent amount of stocks that have been murdered in this sector bear market of 2004, you will miss the fun of watching the “short equities/long oil” trade come undone faster than a John Kerry policy statement.
And, I’m short oil for November delivery -- I’m putting my money where my mouth is
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