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Crude oil how low will it go? – Update

Courtesy of Read the Ticker.

crude-oil-how-low-will-it-go--updateThe most recent price action in crude suggests that those that were long have re adjusted their positions for a downswing.



In our previous post our lower targets are:



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Crude PnF




Notice how the current price action in crude has been seen before a plunge in price.





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Crude Price action




Why is this happening?



Short answer, too much supply. You would think lower prices would be the cure for lower prices and those who pump the stuff out of the ground would cut production, da! However they don’t do this, they see lower revenues and think they need to pump more out to make up for lost revenues at a lower price, thus even more supply. Until the producers cut production (most likely at panic lows and after the banks order them) prices will fall.



Why is crude so important?



One reason is the massive amount of debt behind the producers! Another is there are whole countries relying on the crude oil price for revenues. Lower crude oil prices are dangerous. While the SP500 is at all time highs, buyback debt is huge and economic activity is not supportive of very high stock prices. A crude oil price crisis may be the Jim Rickards snow flake that stops the ‘every thing is awesome’ music. No wonder gold is starting to react to lower prices in crude oil.



There are some that are calling for a miraculous ‘V’ shaped recovery in oil, maybe, well only after those who have shorted oil have made their significant profits. A ‘V’ recovery may be at $35 or $30 who knows!











NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net



Investing Quote…



…“Losing money is the least of my troubles.  A loss never troubles me after I take it.  I forget it overnight.  But being wrong – not taking the loss – that is what does the damage to the pocket book and to the soul.”…



Jesse Livermore





..”It’s easier to fool people, than to convince them they have been fooled”..



Mark Twain





..”The key to making money in stocks is not to get scared out of them”



Peter Lynch





..“How many millionaires do you know who have become wealthy by investing in savings accounts?”..



Robert G Allen





..”Until an hour before the Devil fell, God thought him beautiful in Heaven”..



Arthur Miller, “The Crucible”

 [Contrarian Investing]














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Click here to see some testimonials from our members!