I don't see many good trades on the horizon that are high probability. As I mentioned before, I am bearish on stocks, but I am more bearish on crude oil. While stocks have been avoided because of Syria, crude oil has been accumulated because of it. Based on my view that the importance of Syria has been exaggerated, crude oil is overpriced. Global growth is not sufficiently strong to drive crude oil prices higher from here. And based on COT data, speculators have already made their bets on higher crude oil prices, it would be difficult to get more speculators on board. Without more speculators getting long, fundamentals need to drive crude oil higher, and I don't see that happening. Lastly, crude oil seasonally tops out in September, after the driving season has concluded and before refineries enter a maintenance period which lowers demand.
I was surprised to see such a strong rise yesterday which only reinforces my view that we will not break 1600 on any move lower from here. But this correction, should be more drawn out than the one in June. I am expecting more of a messy U bottom that lasts most of September than a quick V bottom that we witnessed a few times earlier this year.
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2 comments:
Market looking very bullish. Do you think that bottom might have already been in?
No, I think we are very close to another top and we should repeat the 1690 to 1630 trip. Market is very resilient though. We're not going to go below 1600 this year.
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