Thursday, February 4, 2016

The Next Leg Down in Oil: Capitulation Phase

ZH: Feb. 4, 2016
Oil Uber-Buffoon T-Boner Cashes Out 4 Days After Predicting Oil Had Bottomed and Would Double In A Year

"The low is in, UNLESS there's a recession"

Apparently, watching Verizon, Comcast, Kimberly Clark and Kelloggs, all recession stocks go vertical, changed his mind about the bottom...

Oil's downtrend is tracing out symmetrical retracements each of shorter duration and amplitude (absolute terms). There has been no sign of capitulation so far, other than massive increases in volume aka. short-covering...

This chart shows the WTI daily price overlaid with the USO ETF volume (lower pane). The left scale is WTI ($32.75):

The decline is accelerating:
As seen above, the most recent decline (low to low) was much steeper % wise than the prior leg down. 

In WTI terms it was -30%, the decline in the ETF, shown below, was -35%. 

The circle from the prior retracement shows where we are now, intraday.

The next leg down projects to $19 assuming it's not steeper again. I think $10 is more likely.