Do we have an oil bubble?

[Supercilious]

Re: Do we have an oil bubble?

The oil markets delivered evidence yesterday to support our contention that oil is not a bubble.

Oil Prices Explode
September 23, 2008 (BusinessWeek)

Prospects for a weaker dollar and worries about the Wall Street bailout send investors flooding back into the oil market

Crude oil, the newest safe haven? Amid high-profile implosions on Wall Street and the prospect of massive new U.S. government debt, investors rushed into crude oil futures on Sept. 22, sending prices up a record 16% in one day. The price of a barrel of West Texas Intermediate crude oil surged more than $25, to $130 on the New York Mercantile Exchange (CME), before settling at $120.92. The one-session rise of $16.37 rise set a record.

No bubble in history has "popped" as the so-called "oil bubble" was purported to do months ago and then recovered to exceed previous highs. It has not done so yet, but when it does then we will have our answer: We did not have an oil bubble but instead a complex set of factors driving oil prices rapidly upward, mostly due to expectations about future dollar purchasing power.

If and when oil prices exceed their previous $147 "bubble" peak, we will have our answer and can close this thread.

Fred the oil price is now $73.33/bbl . That is 50% decrease from the top of $147/bbl, which was reached almost exactly three month ago.
I think, your previous statement may qualify for the the best joke of 2008.

The only vague mention of this milestone in the news is related mainly to the real estate/development bubble in Fraudi Arabia:
http://www.citywire.co.uk/selector/-...aspx?ID=317685

Even amid a global slowdown, Farooq does not think spending in these economies will alter significantly. In Saudi Arabia, the finance ministry obtains 95% of oil profits which it then allocates to projects with the surplus going into SWFs. Saudi Arabia is building 11 economic cities and Farooq believes these would not be halted if the oil price collapsed completely - although vanity projects such as kilometere-high skyscrapers may be scrapped.

Since I'm now a senior iTuliper, am I allowed to make a nomination for the "Flying Monkeys Award"?

[Guest]

Re: Do we have an oil bubble?

You still don't get the distinction $#*.

This is a large secular bear market event in progress. It has hit the entire global economy. The entire CCI / CRB. The global stock markets. Soon the bond markets. The USD market and all other currencies. This is a 60 year cycle, wherein the current crash (what you call a bubble bursting in oil prices) has occurred absolutely right on schedule within 11 days of the previous 60 year cycle event. This was posted in the Select forums but you have not accessed it.

Please refer to the text underlined and in red color below. It gives you your clue as to what is going on with "petroleum bubbles" - what it's advising you basically is that you are 180 degrees off course in your conclusions. Your sophisticated models are not factoring this event correctly, as they are telling you that you are observing a burst bubble in petroleum while instead it is the bursting of a 60 year commodity cycle.

_________________

GANN GLOBAL - COMMODITY BEAR MARKET - WITH ONLY THE FIRST LEG COMPLETED

Monday, October 13, 2008

Commodity Indices (CRB, Goldman Sachs, CCI)

Summary:

It remains to be seen whether Monday's (October 13) strong rebound in the the Goldman Sachs Commodity Index (GSCI), spurred by relief resulting from a record single-day point gain in the stock market, represents the start of a sustainable bear market rally in commodity prices. We had been looking for a break of the landmark August 16, 2007 corrective nearest-futures low of 473.25, which launched the explosive final advance in a 7-year bull market, to mark a possible first-leg capitulation bottom.

Either way, this leg down is well along and almost certainly much closer to a low than to the high. The next sizable move will probably be a sharp bear market rally that could carry for 2 months or more from an intermediate bottom.

Through Friday, a 2-month and 29-day freefall had sent the nearest futures for the GSCI plummeting 45%. A number of individual markets, including gasoline, copper, wheat, silver, platinum and gold stocks (but not gold) had already breached their respective (2007) capitulation lows. The implosion by precious metals after a 1980 blow-off top is the lone historical precedent for commodities coming down this quickly off a high.

Regardless of whether or not we've seen the first-leg low, we believe commodities remain in a major bear market. After a 7-year bull, we don't see the bear market ending after a single relatively brief leg down.

The 60-year Cycle, which featured the interest-rate backdrop most similar to ours, is the most important cycle, and the July 3 highs in both the GSCI and Reuters/Jefferies CRB (RJ/CRB) landed within 11 days of the July 14 anniversary of the 60-year "Great Cycle" secondary high in commodity prices from 1948. The 60-year Cycle was among the factors that turned us extremely bullish at the lows in October 2001.

As a result, we wouldn't expect the bear market to bottom before April 2009.

[Supercilious]

Re: Do we have an oil bubble?

You still don't get the distinction $#*.

This is a large secular bear market event in progress. It has hit the entire global economy. The entire CCI / CRB. The global stock markets. Soon the bond markets. The USD market and all other currencies. This is a 60 year cycle, wherein the current crash (what you call a bubble bursting in oil prices) has occurred absolutely right on schedule within 11 days of the previous 60 year cycle event. This was posted in the Select forums but you have not accessed it.
[...]
The 60-year Cycle, which featured the interest-rate backdrop most similar to ours, is the most important cycle, and the July 3 highs in both the GSCI and Reuters/Jefferies CRB (RJ/CRB) landed within 11 days of the July 14 anniversary of the 60-year "Great Cycle" secondary high in commodity prices from 1948. The 60-year Cycle was among the factors that turned us extremely bullish at the lows in October 2001.

As a result, we wouldn't expect the bear market to bottom before April 2009.

Within 11 days of the previous 60 year cycle event ????!!!!! :eek:
Isn't this amazing ? That article for select members contains also a complete astrological profile of all Dj stocks?
Let's not forget about the 160 year cycle of the 1848 revolution which started in Italy by the Carbonari (charcoal/coal traders) which clearly foretold today's evolution of energy commodities.

Actually, since the 60 years cycle is only a subcycle of the Great Mayan Sacred calendar (a 2000 years supercycle) which foretells the arrival of the Pleiadians, I think we should make also a connection with the decloacking of the 2000 mile Alien Mothership occurring on October 14, 2008:

http://www.youtube.com/watch?v=HVxDLYSdC2Y


Since I'm too poor and cannot pay for a subscription, I think I 'have to get my weegee board and and a zodiacal chart and write a fundamental economic analysis on my own...

[phirang]

Re: Do we have an oil bubble?

Within 11 days of the previous 60 year cycle event ????!!!!! :eek:
Isn't this amazing ? That article for select members contains also a complete astrological profile of all Dj stocks?
Let's not forget about the 160 year cycle of the 1848 revolution which started in Italy by the Carbonari (charcoal/coal traders) which clearly foretold today's evolution of energy commodities.

Actually, since the 60 years cycle is only a subcycle of the Great Mayan Sacred calendar (a 2000 years supercycle) which foretells the arrival of the Pleiadians, I think we should make also a connection with the decloacking of the 2000 mile Alien Mothership occurring on October 14, 2008:

http://www.youtube.com/watch?v=HVxDLYSdC2Y


Since I'm too poor and cannot pay for a subscription, I think I 'have to get my weegee board and and a zodiacal chart and write a fundamental economic analysis on my own...

You're both forgetting to adjust for leap-years!!!

[Guest]

Re: Do we have an oil bubble?

I spent some years of my childhood in England at school. When I was I guess about 14. One thing I remember about those years was that it seems all year long, the fields outside of the boarding school were always always soggy wet. And hidden among the grass were these great big piles of cow turds. If you stepped into one, in your schoolboy low ankle shoes, you were in deep shit.

This is what you are doing here, "O WISE ONE". The analyst from whom this extract is taken, is one Mr. James Flanagan, who runs an outfit called GANN GLOBAL. He has some limitations, although I say that with consternation because I know my own limitations are far greater than his. But he has accomplished one thing very, very very well indeed. His mentor was a certain Mr. Gann, who was obsessive about employing a framework of historical references to triangulate the scale, and comparative time periods, within which large market moves could be judged.

As you doubtless know, an analyst who is also a careful historian is a rare commodity in the markets. There are a few, and generally when one notes that they are historians as well as analysts, it raises the quality of their output several notches. Eric Janszen (and his research team) are historians. Bob Hoye is somewhat of a historian. But of all of these, this unassuming Mr. Flanagan is a most assiduous historian. When his mentor W.D. Gann died, I've read that his (hand written!) charts spanning 200 years had to be hauled out of his home in a 24 foot moving van. He was obsessed with the history of the markets, and with prodigious energy, set about plotting all the historic market information he could get his hands on. I include a brief resume of who this guy is below.

Maybe we can note that he is reputed to have gained 50 million dollars in his lifetime in trading profits.

Mr. Flanagan is a very modest and unassuming disciple of the work that Gann put together, and in the past 30 years he has researched, amplified and compiled what is reputed to be the largest database of historic market data in the world today. I've forwarded some of his analyses to Bart for a look-over and the quality of his work has won Bart's praise. My own impression is that he's a top pro.

Now you see $#* - you have just stepped into a large and rather wet cow patty. It is seeping into your shoe, and you will have to walk all the way back to your dormitory before you can change out of your socks. I have a great respect for your sophistication, and also that of Phirang who seems to echo much of what you propound. But I've always had a suspicion that you were a wee bit on the flashy and flamboyant side. Perhaps if I could deposit my "two cents" here it would be a suggestion that you take a moment out of your busy schedule tweaking your "models", to check that the database of hard market performance that Mr. Flanagan uses to derive these summaries is in fact substantial?

If you want some freebies, maybe I'll consent to send you a few more excerpts. Unless you are completely unscrupulous in the recognition you dispense for seasoned market pros, Mr. Flanagan's work will wring that recognition out of you. Of course if your conceits run deeper then you will merely continue to dissimulate.

___________________

W.D. Gann. - Brief Biography

Considered by some to be the greatest trader of all time, William Delbert Gann was born on a farm outside of Lufkin, Texas on June 6, 1878. The firstborn of 11 children, Gann never graduated from grammar school or attended high school, having the obligation of working his family's farm. His was raised as a Baptist and kept his faith throughout his life. Gann began his trading career working in a brokerage in Texarkana while attending business school at night. He married Rena May Smith, and had two daughters. He moved to New York City in 1903 at the age of 25 and opened his own brokerage firm, W.D. Gann & Co. In 1919 at the age of 41 he began publishing a daily market letter, the Supply and Demand Letter. The letter covered both stocks and commodities and made annual forecasts. In 1924 Gann's published his first book, Truth of the Stock Tape. His market forecasts during the twenties have been said to be 85 percent accurate. Gann also made forecasts outside the world of investing: he is said to have predicted the elections of Wilson and Harding among others. In his 1927 book, the Tunnel Through the Air, he predicted the attack on the United States by Japan. In his forecast for 1929, he predicted the market would hit new highs until early April, then experience a sharp break, then resume with new highs until September 3. Then it would top and afterward would come the biggest market crash in its history. Gann prospered during the Depression, which he predicted would end in 1932. He acquired seats on various commodities exchanges, traded for his own account, wrote Wall Street Stock Selector in 1930 and New Stock Trend Detector in 1936. He bought a plane in 1932 so he could fly over crop areas making observations to use in his forecasts. He later moved to Miami, Florida where he continued his writings and studies up until his death from stomach cancer in 1955 at the age of 77. W.D. Gann is said to have taken more than 50 million dollars in profits out of the markets. He was buried with his second wife in Green-Wood Cemetery in Brooklyn at a location that looks toward Wall Street.

See also:

W.D. Gann Interview By Richard D. Wyckoff
Gann's 29 Rules of Success
Gann’s 9-Sided Numbered Square

Within 11 days of the previous 60 year cycle event ????!!!!! :eek:
Isn't this amazing ? That article for select members contains also a complete astrological profile of all Dj stocks?
Let's not forget about the 160 year cycle of the 1848 revolution which started in Italy by the Carbonari (charcoal/coal traders) which clearly foretold today's evolution of energy commodities.

Actually, since the 60 years cycle is only a subcycle of the Great Mayan Sacred calendar (a 2000 years supercycle) which foretells the arrival of the Pleiadians, I think we should make also a connection with the decloacking of the 2000 mile Alien Mothership occurring on October 14, 2008:

http://www.youtube.com/watch?v=HVxDLYSdC2Y


Since I'm too poor and cannot pay for a subscription, I think I 'have to get my weegee board and and a zodiacal chart and write a fundamental economic analysis on my own...

[metalman]

Re: Do we have an oil bubble?

Fred the oil price is now $73.33/bbl . That is 50% decrease from the top of $147/bbl, which was reached almost exactly three month ago.
I think, your previous statement may qualify for the the best joke of 2008.

The only vague mention of this milestone in the news is related mainly to the real estate/development bubble in Fraudi Arabia:
http://www.citywire.co.uk/selector/-...aspx?ID=317685

Since I'm now a senior iTuliper, am I allowed to make a nomination for the "Flying Monkeys Award"?

mommy! mommy! look at me! i'm so right! i'm so right!



i said oil was a bubble! now it's down 50% since then.

see! i was right! i was right! look at meeeee!!!!

yo. did you point out the platinum bubble, then?



off more than oil. was platinum a bubble?

how about wheat? don't remember you talking about a wheat bubble...



hmmmm. maybe the answer is here: Fisher, Keynes, Minsky, and Keen on "Bubbles in Everything" and Debt Deflation?

don't know why fred dumped your supercilious title. too fitting, i suppose.

[Supercilious]

Re: Do we have an oil bubble?

The analyst from whom this extract is taken, is one Mr. James Flanagan, who runs an outfit called GANN GLOBAL. He has some limitations, although [...] His mentor was a certain Mr. Gann, who was obsessive about employing a framework of historical references to triangulate the scale, and comparative time periods, within which large market moves could be judged.
[...]
Now you see $#* - you have just stepped into a large and rather wet cow patty. It is seeping into your shoe, and you will have to walk all the way back to your dormitory before you can change out of your socks.

Stop dreaming about cow patties. Usually it's a proof of superficiality or pure faith to accept what someone is saying based only on the qualifications of the person emitting an opinion without using your own brain to perform a critical examination. Remember when Paul Krugman made his famous stick drawing charts and concluded that no speculation can interfere with the spot price of oil and that the Goldman Sachs analyst who was predicting $200/bbl by September should be taken seriously???
Well Krugman got a Nobel Prize ...

Maybe you want to comment on these:

• With over 50 foreign cars already on sale here, the Japanese auto industry isn't likely to carve out a big slice of the U.S. market. Business Week, 1958
• Whatever happens, the U.S. Navy is not going to be caught napping. Frank Knox, U.S. Secretary of the Navy, on December 4, 1941
• We don't need you. You haven't got through college yet. Hewlett-Packard's rejection of Steve Jobs, who went on to found Apple Computers
• The atomic bomb will never go off, and I speak as an expert in explosives. Admiral William Leahy, on US Atomic Bomb Project, to President Truman in 1945
• Theoretically, television may be feasible, but I consider it an impossibility--a development which we should waste little time dreaming about. Lee de Forest, 1926, inventor of the cathode ray tube
• There will never be a bigger plane built. Boeing engineer, after first flight of the 247, a twin-engine aeroplane that held ten people
• This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us. Western Union internal memo, 1876
• Radio has no future. Lord Kelvin, Victorian physicist and President of Royal Society, c. 1897
• It is impossible to transmit speech electrically. The 'telephone' is as mythical as the unicorn. Professor Johann Christian Poggendorrf, Germany physicist and chemist, 1860

Even the smartest amdn most qualified people emit intelectual bloopers from time to time...;)

But I've always had a suspicion that you were a wee bit on the flashy and flamboyant side.

Lukester, I believe you are mistaking me with someone else, who is flamboyant, flashy and fabulous here on the forum. Look at the post above.:p

By the way, I have also a favorite quote:

No one ever went broke underestimating the American public. - H. L. Mencken

[Supercilious]

Re: Do we have an oil bubble?

yo. did you point out the platinum bubble, then?



off more than oil. was platinum a bubble?

how about wheat? don't remember you talking about a wheat bubble...



hmmmm. maybe the answer is here: Fisher, Keynes, Minsky, and Keen on "Bubbles in Everything" and Debt Deflation?

don't know why fred dumped your supercilious title. too fitting, i suppose.

Metalman, PM's aside (especially gold and silver), because there is a lot of manipulation there (although still look for PTM and PTD ), if you can find one commodity that was not subject to index investment (ETF-ETN like paper) having a similar price evolution with oil, I'll admit there is a major debt deflation component.

If you can't you'd better stay with your initial thesis of "it's all suply and demand fundamentals"

[bart]

Re: Do we have an oil bubble?

http://www.nowandfutures.com/grins/cat_fight.wav

http://www.nowandfutures.com/grins/yawn.wav

[Guest]

Re: Do we have an oil bubble?

Not impressed with your grasp of the macro issues $#*.

You are going on like the energizer bunny about " index investment (ETF-ETN like paper) having a similar price evolution with oil ". That's the small story $#*. The entire CRB / CCI slumps when oil slumps, because petroleum price is the leader of the entire sector. When Ghawar and the other supergiants production tilts down just a little bit more steeply, the petroleum price makes the entire commodities complex turn around on a dime

Frankly, I need the financialized style of "macro analysis" for the coming decade, which people of your inclinations espouse like I need a hole in the head. Just a tiny little production tilt downwards, from just two of the very few global supergiant fields the world has, can easily throw the entire world into energy deprived convulsions. So that's the "main event", and it makes the current US B0nar "stellar outperformance" look like a chimp on a circus trycicle in comparative scale or seriousness.

It is simply myopic on your part $#* to spend as much time as you do on the "ETF/ETN like paper". You are like some kind of newly minted MBA delivering his "financialized origins of the world" dissertation, from the cockpit of a Cessna airplane, which is sputtering and about to run out of fuel in mid-air.

If you can't you'd better stay with your initial thesis of "it's all suply and demand fundamentals"

TRANSPORTATION ENERGY USE - OECD AND NON OECD.jpg

SAUDI_GHAWAR_2007.jpg

________ SUPPLY AND DEMAND FUNDAMENTALS - HOW SILLY ! :p

AN IMPROBABLE HARBINGER OF COMMODITIES DEFLATION.jpg

[phirang]

Re: Do we have an oil bubble?

Not impressed with your grasp of the macro issues $#*.

You are going on like the energizer bunny about " index investment (ETF-ETN like paper) having a similar price evolution with oil ". That's the small story $#*. The entire CRB / CCI slumps when oil slumps, because petroleum price is the leader of the entire sector. When Ghawar and the other supergiants production tilts down just a little bit more steeply, the petroleum price makes the entire commodities complex turn around on a dime

Frankly, I need the financialized style of "macro analysis" for the coming decade, which people of your inclinations espouse like I need a hole in the head. Just a tiny little production tilt downwards, from just two of the very few global supergiant fields the world has, can easily throw the entire world into energy deprived convulsions. So that's the "main event", and it makes the current US B0nar "stellar outperformance" look like a chimp on a circus trycicle in comparative scale or seriousness.

It is simply myopic on your part $#* to spend as much time as you do on the "ETF/ETN like paper". You are like some kind of newly minted MBA delivering his "financialized origins of the world" dissertation, from the cockpit of a Cessna airplane, which is sputtering and about to run out of fuel in mid-air.

What irritates me is your superficial way of chirping about this question, as though it were all about debating points. This sort of thing:






[ATTACH]673[/ATTACH]

[ATTACH]672[/ATTACH]

symbols isn't saying oil is going to $10 next year.

What he is saying (and is vindicated, btw) is that people who bought oil equities when oil was over $90/bbl were dumb(or innocent;)).

FCX is trading at the same price as when copper was $0.80/lb... that means copper needs to drop over 50% to justify FCX's valuation (roughly). Junior miners(which I invested in: dumb) are trading at or below cash. Oil/gas companies are also getting crushed, but not to the same extent.

The trade should've been : short resources in the summer, cover now, and go long in a month or so. Too bad this required a meaningful understanding of the credit markets, something I learned after the fact.

What I find most interesting is that consumer discretionary is not pricing in nearly the shyte-sturm that approaches that materials are pricing in... wal-mart... safe haven... pfff.

[Guest]

Re: Do we have an oil bubble?

Correct me if I'm wrong, but this entire set of observations are for traders. Non? Now I know that's a very popular approach on these pages, but I was not aware that this was the only way to skin the cat. Further, traders viewpoints get so engrossed in the intricacies of timing calls they lose sight of the larger point. I also have to surmise that habitual traders would grow pale and faint if they were ever required to hold a position on the merits of a macro call during a market decline.

So what do I need to take away from $#* points here? Mostly what I'm "taking away" sounds like the drone of a mosquito.

symbols isn't saying oil is going to $10 next year.

What he is saying (and is vindicated, btw) is that people who bought oil equities when oil was over $90/bbl were dumb(or innocent;)).

FCX is trading at the same price as when copper was $0.80/lb... that means copper needs to drop over 50% to justify FCX's valuation (roughly). Junior miners(which I invested in: dumb) are trading at or below cash. Oil/gas companies are also getting crushed, but not to the same extent.

The trade should've been : short resources in the summer, cover now, and go long in a month or so. Too bad this required a meaningful understanding of the credit markets, something I learned after the fact.

What I find most interesting is that consumer discretionary is not pricing in nearly the shyte-sturm that approaches that materials are pricing in... wal-mart... safe haven... pfff.

[phirang]

Re: Do we have an oil bubble?

Correct me if I'm wrong, but this entire set of observations are for traders. Non? Now I know that's a very popular approach on these pages, but I was not aware that this was the only way to skin the cat. Further, traders viewpoints get so engrossed in the intricacies of timing calls they lose sight of the larger point. I also have to surmise that habitual traders would grow pale and faint if they were ever required to hold a position on the merits of a macro call during a market decline.

So what do I need to take away from $#* points here? Mostly what I'm "taking away" sounds like the drone of a mosquito.

What I hear is that symbols made bank. This is about making money: the rest is crap.

[metalman]

Re: Do we have an oil bubble?

What I hear is that symbols made bank. This is about making money: the rest is crap.

bingo. anyone long oil through disinflation who can't take the short term losses is nuts.

[phirang]

Re: Do we have an oil bubble?

bingo. anyone long oil through disinflation who can't take the short term losses is nuts.

And anyone short oil during dp/dt < 0 (:rolleyes and long oil during dp/dt > 0 is rich.