Peak Exxon update and global implications of it.

Check the model from my previous post and you will see that it modeled wave 1 down to the $87-$89 range.  The updated snapshot below shows that was not far off.

When that model was being created, wave 4 of 4 was being printed still.  I modeled that as a bounce to $95 which is in fact what happened.  Then 5 of 1 was to take it down to the 87-89 range and that also happened.  Then of course, although I did not show it in the last model, we should expect an a-b-c to the prior 4th in order to print wave 2.  Well, wave 4 of 1 was $95 and wave C of 2 peaked at $97.  Again not perfect but this predicting the market short term future thing is by no means an exact science.

So the real test was what was going to happen after wave 2 was printed and the model expected it to be a 3rd wave down.  While it is not confirmed yet by a lower low, anyone who follows charting would sell this gap down and even flip short.  Wave 3 (or big C) is very, very likely coming to XOM.

So far the broader markets are just watching on like nothing is wrong.  Trust me folks, something is wrong!  When you see the bay get sucked dry only a fool goes down to pick up shells or explore the newly exposed rocks!  Those signs typically warn you that a tsunami is coming. 

Warren Buffett once famously said that when the tide goes out we will know who has been skinny dipping.  But the tides go in and out every day and we see nothing.  And so it makes me wonder which tide Buffett is actually referring to here.  Perhaps his outgoing tide is really a tsunami sucking the water out of the bay.  And perhaps the fluid in his metaphor wasn't water but oil.

Something big is happening in oil right now.  There are two main possibilities:

1. The Saudis don't like the US rise on the oil scene and they know that fracking based oil cannot live below $70 per bbl.  So they are not cutting their output despite the new supply added by the US.
2. The US is not hurting Russia as quickly as desired or as much as desired.  Therefore we conspire with the Saudis not to reduce output.  Who does this hurt more than anyone?  Russia.  Frackers just have to take one for the gipper here.  Besides, we own the world's reserve currency.  We can just print it up from thin air.  Have you noticed a dearth of complaints from the frackers?  They should be screaming bloody Hell but they are quiet.  Almost as if they got tipped to some kind of plan and promised some kind of reward for playing along.

With every war there are always casualties.  Venezuela is going to be one of them.  The plunging oil price means they will certainly default on their sovereign debt.  Who knows what derivatives and other unintended consequences might be linked to that.

Remember what I have said about this global debt Ponzi economy: it is a total house of cards.  An illusion of soundness.  Termites ate the wood right up to the paint leaving the superstructure badly weakened and just waiting for the right shockwaves to bring it all tumbling down on the corrupt heads of the bastards that did it as well as the rest of us who sat there like cow eyed fools and allowed them to do it.  We should have risen up and hauled them off by their hair at gun point.  But we got hypnotized by the false money God and so now we all get front row seats to the largest market, economic and likely social crash in history.

Like I said, we ain't seen bad yet.  But it's coming.