A few narratives at play here with short oil.
1. Slowing global growth
2. Trump squeezing Saud
4. Long term switch to electric cars
5. Technical deterioration
6. High yield pressures
On the matter of high yield. We’re at the top end of the recent channel, poised to break lower.
Oil itself isn’t attractive here. More importantly, the underlying companies will soon become extremely distressed with the price so low. I suspect share prices will dive lower, in anticipation of these companies forced to raise capital via secondary offerings.
Bearish engulfing pattern is in effect.
Lastly, we have a clean breakdown below recent trend in the IWM, small caps. I expect small caps to underperform markets, and also provide insight into the overall mood of the plebeian investor.
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