Is the stock market going to tank?

[yeahman]

Grantham article is interesting. IMO he makes a fundamental mistake when he says that if the Saudis would have decreased production and waited out the U.S. shale boom, in five or six years it would have peaked and the Saudis would be back in the driver's seat with oil prices still around $100. Aside from ignoring rapidly advancing technology that increases recoverable oil from each well, this also ignores the fact that with oil at $100 there are many more shale plays around the world that could have been profitably developed. Comes back to what I have believed all along--the Saudis were not nearly as afraid of the U.S. shale boom as they were of all the other POTENTIAL shale plays around the world.

Only other thing I would say is that I love it when experts like Grantham completely miss (as he admits) a huge event like the oil glut/price drop or the bursting of the housing bubble, then come back a few days later to tell us what the future holds. Uh huh...too bad you didn't have your magic future glasses on a few months ago, pal.

[Bromontana]

^ survivorship bias would likely bite whoever picked the crash next trade. Nobody is above mkt, see Bill Gross, John Paulson, and 99.9% of other speculators.

Keep an eye on the fundys

[4matic]

Tighter non-commercial speculative limits in crude oil trading would help. Put the marginal supply (2-5%) at last barrel sold but somehow regulate price on 95% of fixed demand. We could protect our domestic interest and use more imported oil as needed.

[4matic]

At the end of last year, oil and the Russian ruble crashed, the VIX volatility index doubled, and U.S. stocks dropped 5 percent from their high — all circumstances that normally shake an investor's confidence. Not this time, though: New data from Fidelity shows that while the world panicked, many individual investors in the U.S. were buying stocks.

On one hand, this is good news: Buying during a pullback is generally a good strategy in a rising market. On the other hand, it's pretty unusual for individual investors to do what they're supposed to. Those kinds of good habits don't usually kick in until the market's climb has nearly run its course—which suggests that the good times may be drawing to an end. Doug Ramsey, chief investment officer of Leuthold Group, said in a recent note that investors don't usually retrain themselves to “buy the dips” until late in a bull market, and that's what's happening now: “Retail investors [are] finally shaking off the worry that gripped them.”

[Bromontana]

^ The next few months are going to bring heavy job losses in the shale sector. Combine that with another 5 months of crude inventory increases and you have some powerful macro forces weighing down crude. What's going to bring it up if US energy job losses go 7 digits while Asia and Europe cool? It'll be tough selling the story of oil shortages when worldwide storage capacity is a relevant industry topic.

[Brock Landers]

^ The next few months are going to bring heavy job losses in the shale sector. Combine that with another 5 months of crude inventory increases and you have some powerful macro forces weighing down crude. What's going to bring it up if US energy job losses go 7 digits while Asia and Europe cool? It'll be tough selling the story of oil shortages when worldwide storage capacity is a relevant industry topic.

Shale job losses won't be out of control. Certainly not on the order of 7 figures. Much of us shale isn't the ~$90 marginal cost range. There will be layoffs in some servicerrs, unconventional and deep water drillers, and marginal players (Sandridge energy).

I'm of the thought the dive is overblown and oil will settle closer to where you'd think a late cycle price would be with Europe slowing (or actually just not recovering...)so badly. China is slowing, but china slowing to 6.5% on a base of that size? It's just as much oil as 7.5% growth on 2011's base.
There's oversupply but even calling it a glut makes the natural gas industry chuckle.

In any event, if there were actual job losses in the us, the supply 'problem' would be fixed within a month. And prices would self correct. I don't think it's going to be that easy but also not that dire.

[DasBlunt]

once pumped or processed, how long is Oil's shelf life?

[wolfelot]

^^^ I've always wondered that too.

[Brock Landers]

once pumped or processed, how long is Oil's shelf life?

No shelf life until it's refined into derivative products.

[neufox47]

Bit on USO at $19. Almost bought at $17 before it hit bottom. Rolling the dice.

[Bromontana]

Shale job losses won't be out of control. Certainly not on the order of 7 figures. Much of us shale isn't the ~$90 marginal cost range. There will be layoffs in some servicerrs, unconventional and deep water drillers, and marginal players (Sandridge energy).

"Dallas Federal Reserve predicts that 128,000 jobs could be lost in the state by mid-2015 if West Texas Intermediate (WTI) crude oil remains around $55.00 a barrel. As of this writing, WTI crude is going for $48.52 a barrel." http://www.wsws.org/en/articles/2015.../oils-j15.html

An environment where people are exploring the limits of physical storage as fracking production continues to grow (+68k b/day Feb 15-Mar 15) doesn't bode well for price recovery. To call it a glut isn't hyperbole, the world is literally running out of conventional oil storage options. 2.8 billion barrels is only 31 days of WW supply. That's irrelevant to oil prices, however, if there is no longer a place to store it - the price will be pressured.

The strongest bull thesis of plunging investment and retracting shale production was a prominent theme in the last runup to $54 retests, but I just think the narrative is premature. It's not here yet and won't be for the near term. This cycle will see the establishment of shale as a swing producer (it already is acting that way with CAPEX reductions). How efficient the US is with supply mgmt will be a primary factor in mid/long term outlook of 2016 --->.

[huckbucket]

I'm halfway towards losing a minivan in this short squeeze. Looks like the institutional side is closing up some small positions.

Hope you were able to exit those positions. We're heading up ($OIL).

[Bromontana]

Hope you were able to exit those positions. We're heading up ($OIL).

No I'm down 10k. We'll see in April if I'm right.

[huckbucket]

No I'm down 10k. We'll see in April if I'm right.

I'm at 16% after dca. Even a blind squirrel finds a nut I guess. Like you said ... we're early on the final outcome.

[Bromontana]

This is a short squeeze. Very crowded trade so there's a ton of position churn. 100 shorts enter, half freak out price spikes. Long momentum traders jump in, pushing it higher. Institutions cover shorts to reset them higher, pushes price higher. This price action of the last few weeks is massive churn and vacillation. Crude could go to $70 next week and wipe me out purely based on market structure, and unrelated to fundamentals. Price is now dictated by how many shorts and longs get forced out of positions. This isn't a healthy market, its volatility is still increasing while oil production continues to rise.

The rig counts are illusory, natural gas rigs dropped 90% amid dramatic increases in natural gas production. The retail buyer narrative that capex reductions and rig count reductions will balance the market in Q2 ignores this. If the price hits $60 or $70 this month, it will just collapse back down in coming months amid storage shortages (not enough space to store existing crude).

When storage capacity is broken and wholesale markdowns proliferate the market, I will exit. Unfortunately, that might be a whole lot poorer. My fault though, gotta own your fails.

[4matic]

This is a short squeeze. .

You had a chance to scratch on Tuesday. 2nd chances are rare.

Gasoline has been leading the way higher as it led lower. Consumer and retail numbers have showed up weak again. I don't believe gas savings will be spent and conversely I think a swift rise back above $3 at the pumps will make consumers even more cautious as they have been duped again.

Will Measles be the new Ebola?

[GBB]

This is a short squeeze. Very crowded trade so there's a ton of position churn. 100 shorts enter, half freak out price spikes. Long momentum traders jump in, pushing it higher. Institutions cover shorts to reset them higher, pushes price higher. This price action of the last few weeks is massive churn and vacillation. Crude could go to $70 next week and wipe me out purely based on market structure, and unrelated to fundamentals. Price is now dictated by how many shorts and longs get forced out of positions. This isn't a healthy market, its volatility is still increasing while oil production continues to rise.

"Markets can remain irrational longer than you can remain solvent." Good luck man.

[Bromontana]

Very true, I've had two good outs and passed on both. First was a TA fail, second was a conscious decision to ride it out.

RE Keynes quote, ty. I was a bit naive to think crude wouldn't get squeezed like this.

[4matic]

WTI and gasoline opens Sunday for Tuesday trade. Equities closed till Tuesday.

USD is sitting right on weekly support going in to a long US only holiday weekend. I just can't stomach that kind of risk. I'd be in the dark curled in a ball.. Good luck.

[Bromontana]

I'm out. -10.2k realized. Will look to reposition next week.

[4matic]

I'm out. -10.2k realized. Will look to reposition next week.

Vibes. Always feels better after you puke. My last tiered sale of bonds was top tick but I accidentally rolled it into an intermediate fund that was added to my choices. Cost me $2k so far and bonds look like death on the close. Always close out mistakes at the market and I didn't

[Bromontana]

Thanks, yeah. Very true on righting asap and not getting cute after a mistake. Automatically puts you at a disadvantage with entries you don't want. Being off balance is not a good place to be in a market with a VIX of 70.

Probably best I just go back to intraday and double check the sell/buy buttons

[Brock Landers]

going to the market hungry is a bad thing too.

That commercial was just on!

Twitter and fireeye up big last couple days for me. 10 yr back over 2% now. Reits and utilities may come under pressure.

[Bromontana]

1.1k back today, closed out a small few day short from the $52s. The absence of fundamental support in the oil market is pushing some OPEC members to change course. I don't blame them, OPEC's ability to keep prices high is incredibly important for weak producing countries. I buy into the narrative of OPEC as a price fixing entity losing its grip on price control. While probably not productive long term, the disruption from shale drilling is changing the market dynamic. Current tech applied on a more diverse geographic footprint seems to be at an early stage with unknown production capacity. Shit, Americans took several years before realizing exponential and unanticipated growth. Several traditional Arab states have hidden capacity due to conflict or poor management (or both). Overall, the growth of demand seems to be much less of an unknown than production. And the recent industry trends point to more of an upside than downside risk in changes of future production. If reduced prices of crude materially disrupt 1-5yr GDP figures, I don't think it will trigger a full on deflationary spiral, but it certainly could still weaken demand beyond current estimates. Such a shift would quickly press crude further towards the marginal cost to produce.

[Bromontana]

Chart's filling in, if you're long oil ETFs and have been averaging down, you might consider taking some off the table while crude is $7 off lows. You will be able to buy back cheaper. The question is how long this rebound will last, not if.