Monday, September 29, 2008

The Crash of 2008 (is not over yet)

I've been getting questions from friends today about the failure of the bailout and the stock market's reaction, so here goes. I think today was a historic day that will be remembered for years to come as the day that American democracy prevailed against the power and greed of Wall Street (Paulson, Buffet, Gross, Diamond and co). During lunch today I was watching the market during the $700B "Emergency Economic Stabilization Act of 2008" debate with some traders (email me if you'd like to join our chat), everyone was on edge as the representatives made their final arguments for and against the bill (think in the bunker with helmets on). The 15 min vote began and most (including myself) were certain that the stock market sell off (wall street's way of threatening congress), Bernanke (Great Depression specialist) and Paulson (Treasury God) had spooked the House of Representatives into voting for something of which they clearly did not understand. It was a massive bill which had been drafted in a rush and would only serve to postpone the inevitable downturn. And in doing so, they would transfer taxpayer credit to the same assholes who got us into this mess in the first place. I say taxpayer credit because the taxpayer is already hurting, look at their home prices! There's something to be said about allowing the free market work its self out, but there's also something to be said for congressmen (and women) representing the people that elected them. Good for congress for doing the right thing today and voting no on that bill. The stock market decline sucks for alot of people, but this bear market has been long over due (dow is only down 25% from the all time highs). If the stock market needs $700B to keep from crashing, then stocks are overvalued!! Ok, so do I think that Paulson and co will just give up, no, no way! There will be another bill and eventually they will get something passed that saves the bankers from all loosing their jobs. This might even happen soon, and we will certainly get a rate cut from Bernanke. In other words, this is far from over, but today I felt a hint of faith in democracy and free market capitalism. That's a feeling I haven't felt for a long time.

From a purely technical standpoint the damage was staggering. The Dow Jones lost 777 points (7%), the Nasdaq puked 200 (9%) and the S&P hemorrhaged 107 (9%) after Paulson's bailout got shut down by congress. The Dow and the S&P losses were the largest ever in magnitude and the largest in % since the crash of 1987 (black Monday) when the Dow dropped 23% on a single day. There are some parallels between today's crash and the one back in Oct. 1987 , but not many, at least so far. Here's what happened to the Dow in '87:

There are some interesting qualities to the 1987 chart (click it for a closer look), clearly it would have been an easier call back then. I especially want to point out that the Dow dropped 41% from high to low in that down cycle and the RSI made a low of about 10. Compare that with the Dow dropping only 25% from 14,000 so far and an RSI at almost 40.
I guess what I'm trying to say is, the Dow could (and should) potentially fall much further, don't underestimate the potential for the market to decline more than you expect. A simple measured rule gives 9,750 as a target from today's close below 10,750, but there's also the target of 9,200 for the massive head and shoulders top and finally a 41% from from all time highs (same as 1987) would leave the Dow at 8,300. How far will it actually drop and how long will it takes? Who knows. The sooner it gets there, the sooner we can pull ourselves out of this mess which is partially why I like the House decision today. If Paulson put a gun to my head and asked me how low we were going I would say the lower 9,000s some time this year, but the timing really depends on market psychology and what the next rabbit Paulson and Bernanke can pull out of their hat. I wouldn't be surprised to see it happen tomorrow, but the indicators aren't extremely convincing Note the VIX at all time highs:

I think the VIX is a little misleading because of the short selling ban which drove more investors to use puts to short stocks (since option MMs can short anything naked). If the market does figure out how to rally, a ideal area to short would be near 10,700 on the Dow and lower 30's on the VIX. But if the market crashes down to the lower 9ks tomorrow then you can forget about this bear market imho. Any thoughts? So how well is the short selling ban working out?

Congress Does Something Right For Once

Saturday, September 27, 2008

Saturday Rock Blogging:Great Gig in the Sky

This one goes out to Richard Wright (keyboardist for Pink Floyd) who died last week, may he rest in peace.

Thursday, September 25, 2008

Biggest Bank Failure in History

Tonight Washington Mutual was seized by the FDIC. Due in part to the fact that the FDIC did not have the funds to cover the insured deposits, "basically JPMorgan - in an asset only acquisition - acquired the toxic WaMu loan portfolio and deposit base (all branches). JPMorgan paid the FDIC $1.9 billion, and they expect to take write-downs of $30 billion to $54 billion on the WaMu toxic loans. That is the primary cost of the acquisition - the write-downs." -source

Washington Mutual had assets of $307 billion and total deposits of $188 billion making this the largest failure in history. Another bank bites the dust.....


Jim Rogers is Embarrased

Wednesday, September 24, 2008

Short Selling Financials Ban Quotes

The best time to sell stocks (short or otherwise) in the last month was Friday morning after the ban, nice setup SEC. Furthermore, markets have given back all their gains since. Its sure reassuring that those sales weren't due to short speculation and that we don't have to worry about covering (bear market rallies).

" Imposing new regulations at this time is kicking the market while its down." Head of CME education department

"To think, I mocked Russia for being a nation run by market commies"-Barry Ritholtz

"Its like fondling some girl in a public place, its just wrong. You can't do that." -btb

In my view, the only thing they got right with this ban was the timing. As you can see in the chart up top, the market had bottomed and begun to rally before news of the US ban broke. Sure the news was probably leaked which help spark the rally, but we certainly had good technical support for a major bottom. The ban served to pop prices way too fast to be sustained which led to this relatively orderly selloff ever since (albeit a 500 point decline in the dow). This pullback gives buyers who missed the low last Thursday a chance to get in and potential for support just below here. I'm still expecting a big rally from here but new lows for the year will convince me otherwise.

In other news, Wall Street turns to religion.

Monday, September 22, 2008

The second leg of the 2008-20XX Bear Market may be over or Argument for a Rally

Here's a quick update on how I see the markets today. We appear to have concluded the second leg down of the bear market that I feel began in the first week of this year. As you can see above, the dow seems to have chosen roughly 1000 poiont increments as pivot points over the past few years. The most important prices have been 13,700, 12,700, 11,700 and more recently 10,700. The dow has been rallying 1000 points then it drops 2000 points, rally 1k, then drop another 2k. We now seem to be at the end of a 2000 point drop in the cycle (12,700-10,700) and I think theres a decent chance the dow sees 11,700 before the end of 2008. Curiously we have a presidential election in a few months and a generally bullish season for stocks, will the campaigning and holiday distractions be good or bad for the stock market?

On the same 3 yr weekly time frame you can see that VIX spikes mach up well with market bottoms. While there is a possibility that the VIX is entering a new range (over 30) like it did back in July of last year (moved up into 20-30), it seems like the VIX doesn't like to spend much time above 30. Note that the VIX still lies over 30 (it should drop soon (bullish)):

Now looking at a shorter term time frame on the S&P, you can see how the second leg of this bear market began from a bounce off the 200 dma. I've added the fibs for refference, a 62% retrace of the move seems likely. That would take us back up to around 1325 where that 200 dma should be. To further strengthen the argument, the volume was extremely light on today's pullback. All the bulls need is a follow through day now. That would involve a day of above average and increasing volume where we take out last weeks's highs. After that I'd expect a decelerating rally for a month or so until the next leg begins. And just for refference, the most recent leg (#2) took the S&P down 21.4%. So there may be some amazing short opportunities in a few months. For now though, I'm going to be patient and try out some longs.

On the short selling ban, I think the shorts deserve every penny they made. Peter Schiff had this pretty well figured out a very long time ago and I bet he's made a fortune:

Now check out the q&a session from at the end of this Banking conference:

Imagine that Schiff sat down at a table with both of those two dopes and they agreed on a bet. That bet involved Peter profiting from mortgage declines while the bulls would profit otherwise. These bets were made on grande scales and the shorts were RIGHT. They deserve every penny, the bulls were drunk. Here's the rest of that talk by Schiff two years ago by the way.

Saturday, September 20, 2008

Saturday Rock Blogging: Bulls on Parade

I'm up in Chicago for the weekend so there won't be anymore posts till next week. Frankly, I'm so shaken up by what just happened I find it hard to see the path ahead for stocks. Free market capitalism RIP.

Thursday, September 18, 2008

Market Could Have Formed an Important Bottom But....

I was going to do a post about how the market may have formed an important bottom today. The charts (technical reversals galore), the VIX spike and the sentiment (GS finally cracking, Gold skyrocket) seem to suggest that we will move higher for a while. I was going to post some charts and make my argument. That was until I read this news:

SEC Is Set to Issue Temporary Ban Against Short Selling

If this actually happens the the stock market will collapse, and maybe not recover. We will get a true financial Armageddon. This is the action of desperate fools. This proposed intervention into supposedly free markets will cause complete chaos because short selling has been a vital part of many aspects of the stock market. These are the effects I suspect that this rule would have:

1. Complete loss of faith in US financial markets due to incompetent regulators. Money will leave the US, investors will seek other unregulated assets (like physical commodities).
2. Liquidity will dry up, shorts provide shares to buy when everyone wants to buy and no one wants to sell. Shorts bid for stocks when everyone wants to sell and no one wants to buy. Market makers will no longer be able to function. Options (insurance) would not be able to be sold.
3. Those who are currently short would now have a very good reason to not cover. They won't be able to short again if they do.
4. No short covering rallies, stocks will just fall and fall as people loose interest and want to sell their investments.
5. Complete chaos, our financial system is built on a number of assumptions. One of them is that shares can be sold short. Everything will have to be re-evaluated, no one really knows what would happen if short selling was made illegal. Brokers will loose business, maybe some will go bankrupt. Will put prices go to infinity?
6. All the attention on short selling would distract people from the real problems, oh your know, the global recession and credit crunch.

I think this type of intervention would have exactly the opposite effect that the morons at the SEC think it would. The law of unintended consequences will be working overtime if this insanity actually goes down.

Fwiw, I am long, no shorts or puts here as of today. So I'm not saying this because I'm worried about loosing money on my bearish positions. In fact this news, if it actually happens, would make me more bearish than ever. I will certainly be exiting all my positions if this actually happens then I'm buying gold and burying it in my backyard.

The SEC chairman should not only be fired, he should go to jail.

Disclosure: Long GS, AIG, ICE, JASO, UNG, DBA

Well the crazy bastards did it:

SEC Bans Short Selling of Financial Stocks

What those idiots didn't know was that the market recovered ON ITS OWN today, and that without this crap we might have made a longer term bottom. Instead, the completely inept people at the SEC went into a panic and now we get to see what happens with their BIG experiment in Socialism. Will the system crumble tomorrow or will we collapse when the ban ends? I guess we will just have to see what happens. Capitalism is rapidly dying.

Monday, September 15, 2008

Crashing stocks may bounce, but not for long

With all the horrific news over the weekend (and the past few weeks (and months (over a year really))), today's 500 point decline in the Dow should come as no surprise. Rather, I'm surprised it has held up for so long and that we didn't decline more today. AIG, one of the dow components and the largest insurance company in the world, declined over 50% today after losing $30B in market cap last week. That is jaw droppingly, mind blowingly insane to me. Just, wow. Luckily for the dow, the components are price weighted so an $8 decline is bad but not -50% bad when you compare it to the other dow 30.

Tomorrow the fed will come to the rescue (sarcastic smile on my face) and the bulls have a good chance for a bounce based on the dow chart I have above. There is support around 10,830 and today's decline brought the dow well below its lower Bollinger Band. Typically a drop below the lower BB leads to a short relief rally or at least few days of sideways movement. On the other hand huge volume today (over 2B) confirms a follow through of the long term trend lower as we made a new closing low for the year. Furthermore, the dow is not oversold on a daily time frame by any measure. I would expect any rally to be short lived. The only reason to buy stocks now is for a high risk, short term rally. Owning or buying stocks at this point is only for people who like loosing money. When (not if) minor support at 10,830 breaks, the measure rule targets another 1000 points lower and I bet it happens fast. Bears rule the world right now. The god damn hurricane brought the bears with it:

And here's the S&P, it actually broke down pretty bad today but there is also some minor support just below at around 1,175. Similar to the dow, the S&P closed well below its lower BB and a bounce seems likely tomorrow there as well. Of course the longer term trend is down so anyone playing for a bounce is doing so with a low reward to risk ratio.

One thing worth noting is that futures on both indexes are down significantly right now, currently at:

Dow: 10,823 (just below support)
S&P 500: 1,177 (at support)

Here's the VIX, it had a nice breakout today. The VIX is actually getting up to levels that most would say is a sign of capitulation. While the VIX is indicating some sort of bottom here, I think it has plenty of room to go higher. Why shouldn't the VIX break all the previous bear market highs (37.57), shouldn't market participators be more scared now than ever? Many traders will see VIX in the upper 30's and cover their shorts as a result. That might catch many off guard and allow the market to fall further. Its just that far too many people are now using the VIX to find bottoms. For now I don't want to try and be too smart for my own good and I will just be cautiously expecting a rally.

So if you put a gun to my head I would say the market does gap down to support tomorrow and rallies all day until the fed does what ever it is they do, then shortly after the plunge resumes. Tomorrow around 3pm EST (FOMC decision at 2:15pm) may be a great time to sell stocks. If the fed cuts rates significantly (0.5% or more) then we may get a nice rally in commodities. My favorite, as you know, would be agriculture (DBA). Good luck tomorrow, its gonna be crazy.

Insanely grimm headlines on Bloomberg tonight...

Sunday, September 14, 2008

Lehman Brothers (RIP)

Source for the image

Feds' Lehman Plan Doesn't Sit Well With Wall Street Execs
Sale of Lehman Remains Dependent on Taxpayer Support
Barclays Abandons Talks to Buy Lehman
Bank of America Said to Walk Away From Lehman Talks
Wall Street Prepares for Lehman Bankruptcy
Lehman Files for Chapter 11 Protection
Greenspan: Crisis May Be Once in Century Event, More Firms to Fail

The rise and fall of LEH:

It looks like Lehman is going to be the test case where we see what happens when one of these gigantic financial institutions really goes bankrupt. Is Lehman "too big to fail," well I guess we'll find out. Up until now the mammoth firms that went under were bailed out by the gov (FNM, FRE), a bigger fish (BAC/CFC) or both (JPM/BSC). I'm excluding IMB in this because they were small compared to these others ($40B in assets).

I heard a trader use an interesting metaphor for the situation last week. When a pack of lions has a herd of buffalo surrounded, the one with the fewest connections at the edge of the herd is the one the lions will eat. Right now the buffalo at the edge of the pack are WM, LEH and MER while the lions are GS, JPM, BAC and WFC.

Saturday, September 13, 2008

High Tech Agriculture Futures

How would you like to know the earnings numbers for some stock before the market release? Sure, it would be illegal, requiring inside information, but you could definitely make a lot of money if the market was making a poor prediction. I guess that's why analysts get paid so well; they estimate corporate earnings which can be very profitable for their clients if they don't screw it up (as we've noticed they often do). But what if you could really and legally know the numbers?

That's exactly what Lanworth does for the US agriculture market. They look down on crops via satellite (from earth orbit) to estimate harvest yields for their clients ahead of the traditional, and frequently revised USDA report. And as we noticed Friday, the USDA report has a substantial effect on commodity prices. After the report Friday morning, Corn opened limit up and closed there. Other agricultural futures made similar moves higher. Their clients are primarily hedge funds, farmers and buyers who want an "alternative analysis to complement the USDA's Crop Production Report." Check out yesterday's release from a representative of Lanworth, which discusses the USDA numbers as compared to their own satellite-based analysis.

If I were a big time grain futures trader I would certainly love to have this info ahead of the market. I would just hope that they are better at predicting the harvest than a Wall Street analyst is at predicting losses at their own banks. Lanworth doesn't typically pre-release (before the USDA) their numbers to anyone but their clients, so it's tough to gauge, but I would guess they are pretty accurate. After all, they are directly looking at what they are estimating, and it sounds like Lanworth has a good handle on the weather. Being able to estimate frost events would be mighty, mighty useful for a corn trader, especially this year as pointed out in yesterday's report. I think this technology is pretty cool.

Saturday Rock Blogging: Who'll Stop the Rain

This one goes out to all the unfortunate souls of the Galveston West end, our thoughts and prayers are with you. There was a hurricane hitting the financial markets last week as well, and we are taking on water fast:

Part of the reason for the massive drop in AIG last week was related to worries of more credit losses, but they also insure property and life in Texas where major damage is expected. Hurricane Ike added fuel to an already raging fire and $30B in equity vanished last week as the stock plummeted. Who'll stop the pain?

Bailout Blues

Friday, September 12, 2008

USDA Corn Yield Revisions Align with Lanworth Estimates

September 12, 2008 - The USDA released the September Crop Production Report numbers today, bringing their view on yields into alignment with Lanworth's current estimates.

The USDA revised their corn yield estimates from last month, into an almost exact correlation with Lanworth's early numbers that were shared with customers 10 days ago. In the September Crop Production Report, the USDA lowered corn from 155 bu/acre to 152.3, bringing their position very close to Lanworth's original Sept. 1 estimate of 152.1.

The total corn production estimates from Lanworth continue to differ slightly from the USDA's due to varying assessments of planted acres and acres lost to flooding.

Though yield and production estimates are still developing in this unusually delayed growing season, Lanworth has had a more conservative view of the corn yield since early August. The company says frost will likely play a role in final estimates next month.

"Due to late planting and cooler than normal temperatures in many areas, frost is a very practical threat to current production expectations," says Dr. Nick Kouchoukos, Lanworth's Director of Information Services.

Lanworth uses daily satellite imagery to detect frosts as they occur and to assess resulting production losses. A detailed analysis at the crop-reporting district level allows Lanworth to indicate the probability of frost occurrence, as well as the extent of possible damage to corn and soybean acres.

About Lanworth Inc.

Lanworth is an information technology company specializing in the application of aerial and satellite remote sensing to natural resource management. Lanworth assists clients in making informed decisions in the forestry, government, agriculture, real estate, electricity, gas, and transportation industries. Lanworth supplies its clients with detailed geographic and resource information on a global scale. For more information, visit

For media inquiries, please contact:
Lauren Eichmann
Phone: 312-265-3089

Thursday, September 11, 2008

Nightmare on Wall Street 3: Enter Sandman

With Halloween approaching and blood all over markets I thought that it was time for another installment of Nightmare on Wall Street, part three. The eight below are hourly plots of some of the worst blugeoned stocks over the past two weeks. I want to stress that these are not just some no-name penny stocks that are dropping like stones in freshwater, we saw Washington Mutual drop more than 50% before rebounding a little yesterday afternoon:

And of course we all know about the governemnt sponsored entity (GSE) that manages half the US mortgage market, Fannie Mae (FNM). Thats some serious market value (about $8B) that just got decapitated:

I don't know about youbut when I look at these charts, Metallica just comes to mind. The destruction, the horror, the scale of it all, enter sandman:

Lehman Brothers (LEH), one of the biggest US financial institutions in the US, founded in 1850, is at the center of the most recent panic. LEH appears to be about to file for bankruptcy as evidenced by reports of their inability to raise capital at any cost and their rapidly declining market value (currently $3B (and falling)):

Taking a step back to look at the broader picture, the S&P 500 hasn't really declined all that much in magnitude yet but the chart is anything but bullish. The benchmark index still lies below major resistance at 1265 and the declining short and long term trendlines. Any rallies are sharp and quick to get sold, I doubt the S&P can move much higher before heading back down to test the recent lows:

So there's evidence that this relentless selling is not isolated to the financials. Take a look at Apple, ouch. Some important longer term trends and support levels have been diced on AAPL this week, I have puts:

Not even our good renewable friend JASO is immune to the power selling:

Oh, and how could I forget about AIG, it one of the dow components and the 18th largest company in the world. AIG has lost almost 30% (about $30B in market cap) since Monday morning:

This last one is more for fun since it doesn't demonstrate a significant downtrend in the short term. To keep with the theme, United Airlines (UAUA) did get bludgeoned pretty bad earlier this week when Bloomberg incorrectly reported that United had filed for bankruptcy. The stock lost nearly all of its value in a few minutes before recovering:

These must be long sleepless nights for the dudes on Wall Street. Unfortunately, the waking life does not escape the nightmares in the headlines. It seems we will be hearing news of market gore for some time to come.

In other news, the bears are getting aggressive.

Tuesday, September 09, 2008

"42% of 'tradable' stocks were down more than 5%"

According to Trader Mike today and I will add that 100% of tradable commodities were down today as well. Deflationary days are these.

Monday, September 08, 2008

Sunday, September 07, 2008

Saturday, September 06, 2008

Saturday Rock Blog: For Whom the Bell Tolls (Fannie & Freddie Bailout)


Gov't May Soon Take Over Fannie, Freddie - Washington Times
Gov't Takes Control - Reuters
Washington's Fannie & Freddie Plan: Why Now? - Forbes
Game Plan: Time for a Rate Cut? - Cramer
Fannie Mae, Freddie Mac Are Taken Over by U.S. Treasury to Avoid Collapse - Bloomberg
S&P slashes Fannie, Freddie preferred stock to junk -Reuters
The Details & Comments - Calculated Risk

My take on why this is happening now and not months ago, the strength in the dollar makes it possible. This action will no doubt end the rally in the dollar and we'll just have to see how commodities react to this news next week. While the feds talk a strong dollar they secretly love a weak one because it makes American goods and services more competitive. So this inflationary action (a bailout) is likely to put pressure on the dollar. Take a look at the US Dollar index, talk about a bear market rally, wow:

Thursday, September 04, 2008

Following Through to the Downside

The failed breakout that Stewart spoke of has been confirmed and the S&P 500 chart has rapidly devolved into a full scale breakdown with heavy volume to confirm. I've always said that from failed moves come fast moves and this is certainly no exception. The VIX is still far from signaling a real bottom (needs to jump from 24 to over 30) but the market is getting oversold on the short term time frame. However, I think that the potential for a relief rally is far outweighed by the likelyhood of a real devaluation of stocks in the coming weeks. Deflation is upon us! More later.

Wednesday, September 03, 2008

S&P 500 Reversal, What Happened?

This is an article from a friend and futures broker up in Chicago, his name is Stewart Solaka (aka ChicagoStock). He makes some excellent points about a failed breakout in the S&P yesterday, the VIX and more. If you are in need of a great technical analysis savy futures broker in the Chicago area I highly recommend Stewart, his contact info is at the bottom:

By, Stewart Solaka

With oil along with other commodities across the board seeing a strong sell off into today, and a new year high in the US dollar index, one would think this would be a good case scenario for the SP500 today, right? Apparently not. The Sep SP500 Futures contract started the day off strong, just to end up trapping market bulls and completely reverse off its highs pushing down towards its 50day moving average (1272.73) to make a low of 1271.60, before closing at 1276.50.

Since the low set on the Sep SP500 index at 120100 on 07/15/08, and Oct Crude’s high that day of 147.55, Oil is down nearly 37.84 dollars or 26% and the index is up a mere 75.5 points or up 6% as of today’s market close. But still up, as the ‘bulls’ would say. The reverse today clearly shows that even with energy prices easing, the market will need a much more convicting relief to break out of this range. Construction spending for July came in today down .6% from the forecast of down .3%. While not much attention gets paid to this number, in my opinion this is a mistake. This data feeds directly into the GDP. Non-Residential construction is about 3% of GDP and Residential construction is about 4%. The greater than expected decline surely was not a positive. Today’s market reversal certainly did not play favor to the market bulls, and the bears are looking for those lows set back in July to be retested and taken out.

Chart courtesy of

Pay attention to the VIX!

(The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by SP500 stock index option prices. Since its introduction in 1993, VIX has been considered by many to be the world's premier barometer of investor sentiment and market volatility.

Chart courtesy of eSignal.

The Volatility Index as you notice spiked early in July just as the SP500 futures made a low of 1201. Since then you see this downward trend that was taken out today. Watch for the VIX as a barometer to how the market is reacting. Clearly, if we see the VIX continue to break out and test 25 again, you will notice the market break down, and head to test those lows set at just above 1200. 1260 for now is somewhat of a support. Any break of that in my opinion would suggest lower prices. For now the market is range bound between 1260 and 1300 consolidating waiting for the next break. Upcoming market data, the VIX, and the wedge currently created in the Sep SP500 chart will be key in my opinion.

August Auto Sales expected to be released Wednesday forecasted 4.8 M from prior of 4.4M. Non Farm Payrolls due Friday, forecasted –60k from prior forecast of –51k.


Stewart S. Solaka
LaSalle Futures Group
Chicago Board of Trade Building
141 W. Jackson Blvd. Suite 2921
Chicago, IL 60604
Chicago: 888.325.9300 / 312.554.3900
Fax: 312.554.3908

London: 44.207.669.0170
Sydney: 61.2.8080.2742
Mexico City: 52 55 9153 2035
Zurich: 41 43 500 0685


Tuesday, September 02, 2008

Bullish Cypress Semi (CY) Pattern

Breaking News: Oil Breaks $110

This is a follow up to my recent posts on Oil: "Crude oil fell to a five-month low below $106 as oil companies prepared to resume production from rigs closed by Hurricane Gustav." -full article

I'm looking for some capitulation (heavy volume selling) early this week in oil, then a very sharp rally back towards the old highs.