August Crude is flirting with a key support at 44.12 created in May when the futures embarked on the final leg of their dead-cat bounce from the low $30s. I’d say there’s almost no chance the support will hold and that a $5 break is imminent down to the next ‘structural’ support at $40. In all of the interviews I’ve done since mid-June, when crude futures topped a few cents from a key Hidden Pivot target, I’ve emphasized that the threat of disruptions in supply will hardly suffice to push oil prices higher. This phony story seems to resurface in the headlines about once a week, but it won’t wash. True bull markets in energy are driven by demand-side stories such as “China’s Economy Humming Along”. In fact, the opposite has been true for some time and is likely to remain so for the foreseeable future. Under the circumstances, every rally in crude should be regarded as a shorting opportunity. As much could be said of the bank stocks, since the biggies of the financial world are all-in with loans to the energy sector. When it goes bust just as the real estate market did in 2007-08, the jig will be up, and the final, disastrous stage of the Great Financial Crash will be upon us.
