Sunday, January 17, 2016

"Discontinuous Price Discovery" Time in Oil

Oil closed at $29 on Friday.

Sunday night quote:



Iranian oil comes online Monday. Tankers are full. It's all sellers, no buyers...

"They over-invested trillions of 0% poverty capital in oil exploration, and they were shocked when demand didn't show up..."

The capitulation phase has begun for oil, barring global meltdown, which is my base case scenario...hence when that is already underway currently, right now, as I write, then all bets are off...

Nevertheless, they're already puking out oil, now, having attempted to catch the bottom for a year and a half...

US Oil ETF with volume

"Thar she blows"


Brent weekly with two week rate of change, lower pane
In 2009, capitulation took 8 weeks and a further -50% drop in price. In this cycle, ALL of the onshore/offshore tankers are already full and knife catchers have been trying to catch the bottom for a year and a half straight. Which means oil is going a lot lower...




Oil volatility with stock market volatility (log scale)
"sumamabitch!!!"




Taking down the hedges
Wall Street covered on Friday ahead of the 3 day weekend aka. "accelerated option time decay". Could be a mistake...

5-day index put/call:
In August the ratio was rising, now it's falling...