Commodities, Have Peaked
First, we’ll review oil; tomorrow, we’ll look at gold.
From an intuitive standpoint, you can almost feel it.
The oil and gas sector has launched to unsustainable highs.
Behemoths like Exxon (XOM) with its 63,000 employees have gone from below $30/share to above $110/share, an increase over 280%, in just two years.
In the history of the equity, going all the way back to 1984, that’s never happened.
Even in 1987, before the crash, XOM was up for the two-year period, a paltry 108%, by comparison.
Now, data is coming in nearly by the day about collapsing demand, layoffs accelerating, and inventories piling up.
The latest from Steven Van Metre, at time stamp 4:25, discusses just how fast the downdraft is, and will be.
Before we leave the Van Metre link above, at time stamp 8:50, the assertion is made of what the Fed will do when slower growth data comes in. i.e., interest rates will be halted or lowered.
Nassim Talib called this kind of thinking “Normalcy Bias”.
The opinion of this site is, it’s a trap. Thinking what happened last time, will happen this time.
Let’s mentally bookmark this post and come back six-months from now to see what happened.
We’re in uncharted territory and other agendas are at work.
Like ‘bread and circuses’, the ‘pivot’ discussion is a distraction … keeping the proletariat placated.
We’ve got demand collapsing on a daily basis right in front of our faces and yet, it’s a big mystery (to some).
What’s not known, is how the general population will react to undeniable truth when it finally hits, en masse.
We have a good hint of what’s in store as reported by Jerimiah Babe during the first minute of this report.
Moving on to the Oil & Gas Sector.
Oil & Gas XOP, Weekly
The weekly chart shows the multi-year resistance area that was tested (and rejected) back in mid-June, last year.
The next chart shows we also have a terminating wedge.
Price action has come back to the lower boundary; suggesting a breakdown is a probability.
If we get a breakdown, measured move support is identified at approximately -47%, below current levels.
Strategy & Trading
Obviously, the charts paint a bearish picture.
The first link discussed how price action was very close to making a new daily high. That happened the next session (Friday) and indeed, it had Wyckoff ‘spring’ characteristics.
Price action moved higher and closed higher for the day, but it did not post a new weekly high … keeping the bearish case on the table.
A popular leveraged inverse fund is DRIP (not advice, not a recommendation).
At The Close
As this post comes to a close, a quick check on ZeroHedge turns up this: ‘Tipping Point‘
We’ve jumped over ‘recession’ and have gone straight into crisis and depression.
Charts by StockCharts
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
The Danger Point®, trade mark: No. 6,505,279