Tuesday, February 2, 2016
OVX Oil Volatility and WTIC West Texas Intermediate Crude Oil Weekly Charts
Oil is bludgeoned mercilessly over the last two days smacked back down to a 29-handle. A global economic slowdown, weak China manufacturing data, robust inventories and oil producing nations pumping oil at record rates are sending prices lower again. The bearish sentiment is rampant. Remember the bearish sentiment a couple weeks ago at that bottom in price? Sentiment was very bearish then and it is more bearish now. Punidts are parading across television and computer screens every five minutes one calling for a lower target than the next. Comically, the consensus now is that oil will be in the teens any day.
The taxi cab driver is all-in on the short side with oil. He said the guys on television told him oil is going under 20. Aunt Agnes, a jovial blue-haired soul in a dress that could double as curtains, took her entire life savings and went short oil because the nice young man on tv said it was guaranteed that oil would move lower.
You know what happens when the boat is fully loaded to the one side. Oil volatility, OVX, is worth a look. The levels of rampant fear are confirmed with the elevated volatility numbers. The green circles show where negativity is off the charts, everyone is wringing their hands convinced that oil is about to completely collapse to near zero, exactly when it actually rallies. What do you think will happen to oil as the negative news and proclamations that oil in the teen's is quickly on the way? As a rule of thumb from the OVX chart above, bottoms in oil occur when OVX volatility is at or above 65. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.