OK kiddies – get ready, put your eyeshades on and pull up your sleeve protectors it’s getting close to the time to get down and dirty with King Oil.
Just like whenever Sports Illustrated puts the latest can’t-be-beat team on its cover just so we can bet against them from then on out – I read in Notable Calls that the WSJ Heard on the Street is wondering “which co's will be hurt most if oil stays down”. That my friends is the contrarian call to end all contrarian calls.
Soon the Oil Industry Barons will be able to go back into the shoppes and convenience stores along Rodeo Drive with heads raised high and stomaches pooched out and buy their loved ones those Coach-made handcrafted-in-Borneo-sweatshops alligator purses and maybe even get one for their wives too. Ha! Nancy Pelosi – you can’t take my tax money away from the Oil Barons and expect them to keep the price of oil down – can you? No - I say – No-No-No-No-No.
Histrionics aside (and yes, Virginia, that is a word) the price action this week in the face of all the absolutely negative news regarding oil tax breaks and OPEC not being able to cut production suggests that all of that news is just noise – as usual.
Here’s a picture amigo – it isn’t time yet but it’s getting closer.
Hopefully you can see the similarities with every other blow-off bottom I’ve shown you. Especially the new factor – the “short-squeeze” (thanks Jimmy). Depending on its size and location within the sequence, a hammer can mean many things. Here it means that selling couldn’t hold and a lot of buying took place. I call these two candles “hammer-ish” because they aren’t perfect – but they are very close. This is evidence – and, as always evidence can turn against us – but for now it’s the best evidence we have.
So watch the dotted line folks – as soon as the high pokes above the line Oil should be back.
I am currently not invested in any oil company nor am I planning any investments until after the high pokes over the dotted line. Charts courtesy of prophet.net - a good company.