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The Breakdown Has Begun

A wave of defaults is about to crash over us
Tuesday, February 9, 2016, 12:26 AM
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Executive Summary

  • Oil patch defaults will be the trigger that burns down the markets
  • Defaults will ripple widely across many industries and sectors
  • The banks are suddenly turning on their central bank brethren
  • How to protect yourself from the coming era of wealth destruction

If you have not yet read The Return Of Crisis, available free to all readers, please click here to read it first.

Oil Troubles

The financial sector may be suffering through a bad time, but the oil sector is experiencing something far worse. While overall demand for petroleum is flat or down nearly everywhere, every producer is pumping like mad either to achieve a geopolitical agenda (as with Saudi Arabia and Russia) or to simply survive.

This chart of the price of WTIC oil also sports a pretty convincing head and shoulders formation, a common warning of “lower prices dead ahead”:

It looks like the $30 mark is the area to keep a close eye on, as that represents one possible ‘neckline’ to the H&S formation drawn above.  If that fails, look out below. Expect that area to be defended pretty vigorously by those institutions long oil.

I'm anticipating quite a skirmish over the $30 mark. But ultimately, I believe oil prices have further to fall. I think this because the economic news is dismal – no growth, only contraction right now and that’s going to hit demand – and also because the US has too much of the stuff to store. And because the next...

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