Watching SPY / UVXY form giant crab claw...
And, very atypically for me... watching Bloomberg live as first stab at seeing Powell event while observing chart reactions...
And, "Bloomberg live" feed is not "live" but are playing a "history" as filler... about a small and informal but closely linked group of friends in Essex... acting individually, but an informal trading group... that made $700 million on an huge oil bet in WTI futures... selling oil futures... LOL!!! Sorry fellas... I think that you just missed that re-play...
Still, have shifted my focus in the oil question today... having now validated every element in my deep dive on fundamentals... which forces the focus back to "charts" in context of the fundamental... and looking at the bread crumbs left by the trade that has already occurred...
Which means... your post on the nickel market... is EXACTLY the same element in focus re the oil trade now... but, not just oil... obviously...
And, of course... awareness of "a change" that occurred... forces recognition that the history on the chart assumes a continuous function... when reality is, if not often, occasionally discontinuous. Recognizing "sea change" that just happened... the tide reversing... currents altering... winds and storms blowing... is an "exponential issue"... but rarely recognized as that "at the time" the change occurs... but only later, as people impose their normalcy bias of "before" in their view on chart history... without necessarily understanding the fundamentals carving those patterns... much less how change in them alters the future in the white space to the right of the last tick. And, they continue to use that "track record" as a guide in any reaction to any input that seems it violates "the norms" the chart "imposes"... but, the chart imposes nothing... other than validation of "don't get it" when a change occurs ? People looking at charts tend to forget that truism... that the only part of the chart that is actually relevant right now... is the last tick... and the white space...
But, always, yes... the understanding of the context conditions the view... and if the context is not changed... it is rational to expect "continuation" within the framework built by prior dynamics...
So, the question is one of "what does the chart mean, now"... after a change. I've noted that mostly in discussing the Basel III trade, the chart patterns the suppression trade in gold and silver develops... and the evidence in charts that it "ended" last year... a clear change in evidence on the first trading day in January... but, that still leaving the prior trade in mode of "winding down"... after being released from control. And whatever follows that is not yet known... trade at bottoms being always tenuous... making a "thready" trade... Still, the analysis of patterns there saying... both... yes, it changed... prior pattern done... but, also... wait for it... as "end of March" before prior chart patterns (1980/2011 basis) "wind down" close out and enable... "next". Is that rational ? No. The change is already plenty apparent... the drivers... impossible to ignore... and amplifying by the day... with pending attachments introduced to append to the failure of "tranistory"... [yeah - a typo... but in context... funny enough to leave it] But, there is fear in expectation the beatings will continue... the moment you buy in... (some will see as validated this week)... is still a strong deterrent. But, the market will wait for it... as, the rain has ended... but the clouds have not yet cleared...so, wait for the sun to come out before thinking golfing or beach a good plan. That transition still proceeds apace... seen in the "breakout" in gold... not silver... which I see as "noise" or "nervous anticipation" in a small preview of coming attractions... not as... "that was it"...
But, in gold and silver... the banks knew the risks they'd taken on with paper shorts that were "an extinction level event" if they were realized... and if not "fixed" rather than "papered over" WOULD be forced to be realized... (Go, GATA! to "gold gonna go"... and the patient seemingly happy to be.) And, it took them 11 years to "fix" it ? Sort of like... it took eleven years of QE to... fix it ? And... QE ends today... right ? Why ?
Because must... done... time expired... alarm clock is going off ?
What we see in nickel... not remotely similar in scale, risk, or time required... but, without the "fix it" need in focus at all, "the market broke"... Seems due to poor design not capable of handling load. And, now, they're still tinkering under the hood to see why its missing on one, and mis-firing... As the truck is just back from shop... I have some advice, and suggest... towing much too heavy a load, up hill, with pedal to the floor... resulting in blown valve cover gasket... resulting in flow of hot gas... resulting in burning through wires near leak, wires linking to electronic control... resulting in 7 of 8 firing right... one not so much. But, back from the $hop... purrs like a diesel kitten, again, still, without that "fix" altering need to pair towing bigger loads with bigger trucks... or using a lower gear and driving slower with a lighter foot. Is the market designed for the load it has to pull ? In nickel... it seems... no ?
But, of far more consequence... nature of the trade when the market breaks... versus the underlying issues in REALITY IMPOSING changes in valuation that... really are not of concern in context of prior chart pattern... as that pattern was crafted before the market broke ? And it was the failure of "normalcy" under that prior chart rule... that broke the market as expectations in limits proved wrong ? Nickel today... down... because "market back up"... and because prior move "up" was... front-running risks AS the market was seen failing ? So, "risk off" now because the market is NOT failing... makes the market fail, again ? Another new gasket... more wires... or... something else ?
And, then oil... where the same... if not vastly larger risk... is looming in "chart inversion" to the upside with the opposite of 2020's demand destruction, with 2022's supply destruction... currently in progress...
Is the oil market... no more capable than the nickel market... of handling that stress ? Or, is what we see the evidence of implementing "using a lower gear and driving slower with a lighter foot" ?
And, still... what is the RIGHT price for nickel... not because a short squeeze happened... but because of what was happening in the market before... that forced the short squeeze to happen... which is still no doubt what is happening in the market... as short squeeze or not... does not drive reality... but reality drives short squeeze or not...
In oil... was the move last week... "a short squeeze" like in nickel ? Or, what ELSE is happening... that might drive the RECOGNITION EVENT in the coming chart inversion... driven by the FACT of Biden's forced supply disruption and removal... ? [Leaves markets NOT understanding or well focused on "real impact" of sanctions... including... direct impacts on Russia, but also "other" impacts likely in result of imposing them ?]
In time sequence:
Petrodollar Cracks: Saudi Arabia Considers Accepting Yuan For Chinese Oil Sales
Rabobank: The Petroyuan News Suggests China Is Preparing For US Sanctions
Hey, Earl... hand me a match. I think there's something down in the bottom of this tank:
Oil Slides To Session Lows After DOE Reports Unexpected Surge In Crude Inventories
The futures so bright...
Energy Traders Ask For Central Bank Bailouts To Save Them From "Margin Call Doom Loop"
What "fundamental" says "lower" as supply CANNOT be sustained under already imposed changes... ? Oil lower... depends on you believing the Biden Administration is NOT lying to you about U.S. production suddenly delivering record volumes... "next month"... which forecast, i do believe, will prove "transitory." And "price" as "about market function"... versus... real cost of obtaining supply ? And... oil prices really are not set by anyone other than OPEC... so, "noise" in the space above OPEC price seeking to front run trends... is not the same as "the ability to dictate price"... because "we're the market"... ?
And, the bigger question... is what does oil priced in U.S. dollars cost... when you have to pay for OPEC oil in Yuan instead of dollars... as oil is the pillar on which the dollar is based, and has been since the 1970's... while we see that Biden is aggressively working at toppling that pillar...
Re-charting oil weekly... with annotation update... that does NOTHING to alter validity of prior charting effort... but may supplement timing issues... as noting timing patterns versus steepening occurring inside volatility megaphone...
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