Dec 07 2009
Oil breaking down – Deflationists may be right
Oil has now firmly lost the $75-$77 support shelf.
I wouldn’t be surprised to see a retest of the 200 MA (red line) around $66. If you think we’re going to runaway inflation, you are going to be disappointed.
Meanwhile, the USD Index today had its first close above the 50 MA (blue line) for the first time since April.
If the USD Index doesn’t head south soon, you could see an ugly short dollar covering rally. The short dollar trade is very crowded. On top of that, the unwinding of the USD carry trade will have disastrous results for equities. But even so, I’m not pulling my currency hedge.
And looking at Gold, this may not be the top, but the price action is very top-like. Confirmatory price action in Oil and the USD Index are not encouraging.
Who knows what will happen? In any case, things look very interesting and it will be fun to see what happens in the next few days.
[...] Yesterday I said I wasn’t going to pull my currency hedge. [...]
[...] this and this? Well check this [...]