User 273178

Watch for Yourself: 60 Minutes Oil Story Was Spot On

Sorry, but there is a lot wrong with this article, and the 60 minutes article. In the interest of time, I'll mention 2 things that anyone who's ever spent 20 seconds following an energy market should know, but have been ignored.

1. THE DOLLAR! When the dollar was collapsing, it made dollar-denominated assets (oil, gas) go up. The dollar stopped falling early in 2008, built a base, and started rising very sharply, and that coincided with oil's collapse. For the record, back in mid-July I called for the crash in oil, to 90 as an initial target, then lower potential. I also was bullish on the dollar shortly thereafter.
When the dollar started to rise, the opposite effect obviously occurred, so it helped oil to collapse.

2. The $25 dollar rise in oil on Sept. 22nd was horrendous journalism, and it is obvious they have no clue what caused it. I was watching the spot and 2 forward month contracts when that happened. Within 30 seconds, the reason for that rise was quite obvious. The current contract was due to expire that afternoon. Shorts were forced to cover. There was little volume because the real trading was occurring in the next forward month. So a short squeeze occurred. The next day, the oil contract switched months, and the price was back where it was.

How was it so obvious there was something contract-specific going on?
Besides the low volume and wide spreads in the trading, when that contract was up $25, the next 2 forward contracts were only up $4. Those 2 were trading as they should, and did NOT accelerate with the other contract. And gasoline didn't rise to match the oil rise either. They should have known this, or not even brought it up, because that one day spike had ZERO impact at the pump, or anywhere else.
I'm sorry, if one can't see this, as it is so basic, everything else said should be suspect.

Another fact. Bubbles occur, we've seen a number of them. That was a bubble that burst. For every buyer there is a seller. If the volume issues brought up were a reason for the rise, it wouldn't have fallen $112 from its high now would it?

Oh, and the author suggests the $25 move asserts that doesn't happen in the middle of moves, but more at a top or bottom. Wrong. It most certainly did happen in the middle of a move-a down move. Oil had fallen from 147 to 90, and that incident was during the bounce from 90 before the next wave down. News isn't required to move a security. Technical factors matter. The problem is, that the media always has to find a reason for the tiniest move, so people think the only reason something moves is because of news. Rather, news is written to fit the move. That is Elliott Wave territory, which could explain this a lot better than CBS certainly could.