No, of course not. Demand is falling, the dollar is strong, Iraq and Libya are pumping qazillions of barrels, and Iran just isn’t that important, right? It’s an election year and the sky is raining double edged swords.
Only a dozen weeks ago I was reading about corporate and GDP growth, central banks were pulling the yoke hard and an upward trajectory was (nearly) assured. Demand for oil would be growing. I can’t deny the analysts and media their optimism, the argument in context was probably warranted. In my sceptical and admitedly naive mind, oil prices have less to do with supply and demand than the press conditions us to believe. Marketing, spin and speculation (isn’t hedging speculation?) aren’t given enough credit therefore might speculators be thanked if Light Sweet falls to $50? I’m sure they would be blamed if it went to $150.
It doesn’t really matter, who’s to blame or not, I just thought I’d ask the question.
It’s Friday, already.
The largest disconnects I see this morning are: an .8% decline in the EURUSD which takes us back to Monday; a 3% decline in $CL; a 2% decline in $SI but the $ES has hardly reacted. I was expecting a market reaction to the Trade Balance Numbers, interpreted as a proxy for Chinese strength/weakness and/or European strength/weakness. Nothing much happened, I guess it met expectations.
It’s been a long time since we’ve seen a 2% drop across the board. Europe is getting ready to close and my only rising indicator is Gold which seems to finally to be working again as you might expect – safe haven. I missed that trade, though considered it yesterday. Who’d have guessed the numbers today would be as bad as they were?
I’m adjusting a $SPY 130/125/120/115 condor and adding a bit to my short 120’s; if after the European close we break 130 I’ll add to my 130 leg, if not I’ll hold them through the weekend. The trend is solidly moving towards my target range of 120-125 for the $SPY. I’m going to stick with the spread and adjust with the swings.
My expectations are that we’ll see some positive headlines out of Europe this weekend. The bureaucrats are running around trying to find something good to spin at this very moment, you can be sure of it. Germany, red. France, blue. Ireland, green. Whether they’ll succeed in not falling all over each other is another question, but Hollande has by now probably plugged in his telephone.