Heave Ho

By -

When Springheel referred to One More Heave in his post this morning, I had something like this in mind. Anyway……..

My obsession with crude oil and energy stocks is well-documented. I wanted to talk a bit about this daily chart of the oil & gas explorers ETF. I see it going through these phases:

+ Magenta – a very well-formed head and shoulders top; the bulls didn’t have any idea what was about to happen to them;
+ Yellow – the initial plunge, prompted by the magenta pattern, with some stabilization;
+ Cyan – after the Saudis said they weren’t going to curtail production, all bets were off. After Thanksgiving, things went into another free-fall, double-bottoming in late December and early January;
+ Grey – this is what I’ve been stomaching all month – – a blinkered recovery


In spite of crude oil weakening quite clearly, the energy stocks seem to be giving me the bird and not budging. I think they’re going to budge sooner or later, and to the downside. At a minimum, I think they’ll challenge the lows we saw last month. If deflation really grabs hold, we could conceivably see oil in the 30s this year, with energy stocks following it south.

Mark This Post as a Favorite