When there is an asset bubble driven by excessive liquidity provided by the FED, everything can go up regardless of fundamentals. Last year, oil was largely struggling for most of the time and back in October most folks were looking for the price to fall. The sentiment at that time for oil was extremely miserable. Well, from the contrary perspective, that was the best time to buy actually. That was the time I turned bullish towards it:
Rotation has started!
Today, after a monstrous rally, most folks are looking for even higher oil prices. Heck, one analyst on a financial news network spoke last week, calling for a $100 per barrel price target. But again, from the contrary point of view, this is the time I think we need to be a bit cautious about oil. It seems to me that the next move for oil is most likely to be lower when nearly everyone else is bullish about it.
This chart seems to support that view as well. Take a look…
While oil keeps heading higher, its momentums are losing the steam and are heading down now. This is an early warning sign and a turning point may be very close, even if not starting immediately. Similar to what I did a few months back, I start to go against the herd by shorting oil now. We will see how it goes in a month or two!
PS:
I have registered as 深山老林 at SafeChat (SC) (You need to download the SafeChat app first) and have set up a new SC chat group. I'm gradually shifting our major social media interactions to SC instead of WC. If you'd like to join my group, sign up a free SC account easily and search for me and connect me as friends. For friends sharing similar conservatism views, let's come together to form a better chatting group that won't be constantly disturbed and harassed by the insane radical censorship!
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