Oil - A New Long Leg Down Soon Begins

NYMEX:CL1!   Light Crude Oil Futures
The oil markets have been something of a puzzle to everyone on account of the fact that they range sideways for long periods of time, move a little bit, decapitate one side of the market, and then range again.

One thing I've been sure of is that after doing $120 post-Ukraine War, and after WTI literally hitting $0.00 ( $-40 settlements lol) this certainly was not the top.

And yet the problem is, this retrace has gone on for too long, with any and every rally increasingly being melted away and melted away. So it's not bullish, either.

There's major geopolitical problems right now.

One for the oil long is that because Russian oil is banned from the market by the International Rules Based Order, it doesn't mean that demand increased for futures-traded oil.

Like, futures oil is primarily the United States' domain, and you know the leftists in Washington are short hard on oil because they sold off the SPR.

How it works is you ban Russian oil from the futures controlled markets. The catch is that Russia still sells oil and sellers always have buyers.

It means Russia sells at a discount or sells in exchange for rupees and yuan instead of petrodollars.

Which means that demand from smaller countries and even bigger producers moves away from futures-traded oil and into Russia's pockets, which ultimately drives the price of commodities down.

Geopolitically, because of the problems between Mainland China, its current ruler Xi Jinping, and the IRBO who operates via Taiwan as a proxy, anything can happen at any time.

China is the biggest wildcard in the world because it's the only 5,000 year old country, has an enormous population with exceptional natural resources, and is ruled by a Communist Party that has become exceedingly inferior and weak.

What this means is that the CCP can either fall or be overthrown literally any day. You won't hear it's going to happen days before on CNN and from The Washington Post.

It will happen during Beijing business hours, which means the middle of the night in Manhattan.

And if Xi is smart, he'll throw the Party away himself and weaponize the 24-year persecution and organ harvesting genocide against Falun Dafa in order to protect himself and the country from "War With Taiwan," which really and always has meant the IRBO trying to take control of China via Taiwan Ukraine Maidan Revolution-style.

Since this event is in the cards, if it unfolds, it means we'll see $200 oil and in a big hurry. Really, in a big hurry.

But before this happens, it only makes sense to melt down all the early longs and liquidate some funds first.

I have an open call on Taiwan Semiconductor where I believe this company, because of the Taiwan situation, is a super strong long hedge in the upcoming markets:

TSM - Taiwan, Your Semiconductor Long Hedge

So, here's the call.

All we have to do is look at the yearly candles and we can see that last year's price action was something of a yearly wick play.

And so if we take this logic and we expect that after taking the high wicks, the low wicks are next, we wind up with some clarity on a set of monthly candles that is otherwise nigh indiscernible.

Unfortunately for bulls, that means we're looking at prices that start with a 3-handle.

Nobody ever believes it when you make a call like this, unless it happens to unfold right away.

And while these markets might manifest in a faster way in the coming months, oil is still something of a landslide down and tractor pull up kind of market maker who employs sharp shakeouts along the way.

Here's the thing: The OPEC production cut news in April was a canary in the coalmine, only because the rally was clearly a stop raid and failed.

The May dump afterwards was a bearish harbinger of doom. It confirms the market makers are seeking continuously lower prices on higher time frames.

On monthly bars and with recent price action, the $62~ level is supposed to be "support."

But this support is likely to be broken if this rally fails.

I believe this rally will certainly fail and we are about to have an extremely significant optimal short entry at roughly $79.

If the theory is true, see how fast $61 comes.

And after $61 is broken, perhaps it will actually be a breakaway runaway.

If that really happens, then the targets are 3-handles in the $34 and $36 range.

You better believe it.
Oil appears well on its way to $79 to start the week.

Will have to see if price gets stopped and ultimately rejected through Tuesday and into FOMC/inventory Wednesday.
An important piece of market action today was the annihilation of Raytheon on earnings at a 16% dump.

They say it's because of the disclosure of some problems with its jet engines.

However, if the real cause is because insiders know the Ukraine War is about to end or be dramatically dialed down, that factor may be the catalyst needed to send oil testing a 5-handle again.
It's really notable here with oil that it can't get over $80 and is showing intermediate failure swings.

Likely means that even if it does go over $80 it would just be a squeeze.
Can oil keep going, or now that it's hit $80 and printed rejection, does it failure swing?

All markets look like trouble now.
So, what's up with oil?

Well, either price gets held back here, or takes the $85 gap. I think from a true bear perspective, one doesn't want to see the Saudi cuts news driver high at $84 get taken out.

You just have to ask yourself how realistic $100 oil is right now. There's A LOT of greed in the markets.

Equities wise, people are buying tops every day, getting rewarded for it, and frothing over the prospect of SPX 5,000.

And yet Fed rates are likely to push 6% before the year is out and bond yields may push 5%.

Buffett always said to be fearful when others are greedy.
Has oil finally topped?

Taking lows after reaching $82.50~ is notable. I think we can at least surmise that it's topping.

Which does not mean that $85 will not be taken. But we might see something like a $76 --> $85 breaker leg.
Oil bulls see this as confirmation that it's time for $100.

Oil bears see it as a judas swing and optimal trade entry.

The annoying part of life is if it prints $85.

But Non-farm Payrolls is tomorrow, and that's pretty much as volatile as FOMC/CPI days.
Was this run over $83 just a breaker inside of the ShortGod block?

Time will tell, I gander. A lot of people are bullish. Why are they bullish?

Because of greed.

Who is really afraid right now? Only idiots like me.
Oil stops just short of the key level at $85, and the sell off has not been of any particular magnitude.

I suspect it's setting up to make a breaker on early shorts, but it also seems that going long is tricky right now.
Oil setting the August low this morning followed by a significant bounce on shorter time frames is likely the indication that the run to $86, or higher, is beginning.

Oil made its move, and relatively fast. First day of the month and it's finally filling that pesky gap on the daily.

The question is, is there more moon in store?

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