The bear case for commodities is actually quite bearish for the overall market. It would imply demand destruction and recession. Same thing happened in 2008. Oil went up a lot alongside every other commodity, until recession hit and unemployment soared and the whole complex collapsed.
Above are two indexes inside Stocklabs, one focused on just energy and the other a representation of the whole complex.
Our 6 month algorithm is now oversold inside Stocklabs for the oils, a stark difference to what we saw on Friday where 88% of stocks were ranked bullish.
These routs are always caused by crowded trades and people stampeding for the exits. Often times the masses are wrong, leading to great trades for those buying into weakness. The commodity trade, however, is reliant upon the actual prices of the commodity and must of that is based on economic realities — not some people on Reddit crowding into a trade for meme value.
WTI is now off by 8%, Dow +300 and the German DAX +2.6%.
Some perspective, the last time the oil sector was down over 6% in a single day was during the halcyon days of negative crude in peak COVID panic of 2020. The next largest drop was Dec. 2021.
I’m not selling yet.
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glad gold topped // have I been banished from SL?
Oilman still
No tools to solve demand,
nor supply side issues for inflation challenges,
Market will suck and blow, I’m good for both
Oil stays higher for longer
And my pecker stays harder for longer
richardwiener, is that you?
WTI -$6.66 you do the math