Everyone calling a top, oil to fall to $85.00

[TheWilling]

PabstPrime wrote:

I agree with the OP. I hear a zillion people a day say "bubble", "when it goes to 85", "true value is 70" ect. I LIVE to short runaway bulls. I won't even consider shorting CL until I see less bearish sentiment. As a tape reader it's clear to me new shorts pile in on every $2 decline and find no commercial selling in back of them to cover into. Manipulated, over speculative markets don't grind higher they explode higher. This stuff still has a ways to go before it punishes enough shorts so that it can finally top.

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In other words you are looking for extreme parabolic tops no matter what the item, and it either has this characteristic or it does not.

 

[JamesVU2000]

No one knows whats going on with oil.

 

[Cutten]

Quote from SWhiting:

THAT is the $64,000...er..I mean.. $64,000,000 (inflation) question, Cutten. I've asked myself that very question many times when I try to catch the top (or bottom) of a move. Solve that problem and a man can be rich, rich, rich.

It's easier said than done, that's for sure - but I'm working on it

In pretty much every major (as opposed to minor) bull or bear market I've see, there is capitulation and a sentiment extreme, usually along with a major parabolic move, before the ultimate top or bottom occurs. There are a few exceptions such as stocks in 2007 - there the trigger was a major fundamental shift - but one could also argue the top took a good 6 months to form. You can get unannounced corrections, such as the move from $135 to $121 a few weeks ago, but the ultimate top seems to have this extreme of price momentum, sentiment, and panic buying/short-covering (or selling/margin calls for a bear). Certainly we don't yet have the oil equivalent of a sub-prime bust in fundamental terms, so I think the capitulation method is the way this will top out.

Now I would be the first to admit that identifying this is not an exact science, but I think it provides a reasonable guide - better than any other indicator I am aware of.

 

[dhpar]

some moves are real... and some moves are not.

to compare oil run with a dot.com bubble is like comparing porsche with GM...

 

[JamesVU2000]

I think one thing we should keep in mind is that oil is a commodity and its therefore different from equities.

When it does break the market will head down vertically.

 

[Landis82]

Quote from Cutten:

Tops do not occur when widespread sentiment is bearish and everyone is picking a top. Just like Pabst said, this is an over-shorted market that most people are sceptical of.

That is until margins are raised and it becomes a "liquidation-only" type market like the COMEX did to the Hunt Brothers back in 1980. Throw in a few interest rate hikes by Volcker, and it was all over but the crying.

Remember, as of the end of Q1 of this year, $70 BILLION of pension fund assets were "invested" in the energy futures markets. Let me repeat: PENSION FUND ASSETS!

There are some people in Congress that have a BIG problem with that.

Govt. changed the rules once before.
They can surely do it again.

 

[Cutten]

Quote from dhpar:

some moves are real... and some moves are not.

to compare oil run with a dot.com bubble is like comparing porsche with GM...

When you've improved your trading skills and experience in a few years, you'll understand my comparison.

 

[JamesVU2000]

You dont know how this is going to end. No one does.

 

[shortie]

Quote from Landis82:

That is until margins are raised and it becomes a "liquidation-only" type market like the COMEX did to the Hunt Brothers back in 1980. Throw in a few interest rate hikes by Volcker, and it was all over but the crying.

Remember, as of the end of Q1 of this year, $70 BILLION of pension fund assets were "invested" in the energy futures markets. Let me repeat: PENSION FUND ASSETS!

There are some people in Congress that have a BIG problem with that.

Govt. changed the rules once before.
They can surely do it again.

5 years from now with oil >250, Landis will still be maintaining that oil should be priced <80.

 

[dhpar]

Quote from Cutten:

When you've improved your trading skills and experience in a few years, you'll understand my comparison.

well, what should I say to comment like this?

maybe... one thing that does not change is ET members' class!