Yesterday I alluded to the dumbest of all trades taking place — a decline in oil buttressing the idea that consumer related retail stocks were good. The rationale is strong, providing the economy in Europe wasn’t on the precipice of total annihilation. There are many things in the market to fear — but none as much as FX markets gone awry. When currencies and bonds are in play — bad things usually happen.
Having said that, I had the trade sentiment right but missed it this morning, as I sold out of all of my positions before they could propel higher. Do not fear, I bought the trade back again and now I will sit and wait for people to follow me into LULU and ULTA — super excited about the specter of yoga in the midst of WW3.
On the issue of oil: simply counter-trend action taking hold. Long term, I like them here. Short term, I’m with the idiots.
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On paper, short oil is the dumbest of all trades.
We know the SPR is papering over demand shortages. China will reopen again shortly. Natty is so expensive oil will be used as a substitute increasing demand further. Investment in new wells is well below what is necessary. The economy has not imploded it is holding up well so far and probably no recession this year.
Yes, on paper short oil is the dumbest trade except that it keeps working…