Oil Cannot Keep At These Levels For Long

We are witnessing a strange moment in the markets at the moment. Currently, with a massive net speculative long position in oil and a massive net speculative short position in the dollar. Everyone is massively either short the dollar or long oil. These two conditions are ingredients for a napalm run on either the dollar or oil markets.

With global growth slowing down according to most leading indicators, a dollar rally is usually expected as capital comes back to the US because it is the safest market in the investing world in times of duress/ slowdown.
We therefore expect other currencies to fall faster relative to the US dollar i.e. The US dollar outperforms other currencies. This is why we think the US dollar rally is not done as of yet. This usually has negative effects on the oil market due to oil being priced in dollars. In other words, as the Dollar rallies oil tends to fall. But over the last two or so weeks we are witnessing something rather interesting. They are both moving in the same direction. THIS WILL NOT LAST.

We entered a long oil position late last year and a long OXY position in February. This morning I took some profits off the table and swapped into a long dollar vs a basket of other currency trades for the next few months that trade seems to be working well so far and we believe they are a good hedge in this current environment. I will advice traders to start looking at these sort of trades and keeps the USD and Oil on their watch-lists as things can start to get ver interesting.

Ladies and Gents I would advise everyone to be careful as we are reaching some interesting levels in these markets and they trend fast very fast in-fact! Therefore it is imperative that you keep your stops tight and emotions steady. Until Net Time.

Peace ! RMD

Disclosure There is risk in trading markets. REAL MACRO DYNAMICS reports are based upon information and research gathered from various sources and believed to be reliable but are not guaranteed as to accuracy and completeness. The information in this report is not intended to be, and shall not constitute, an offer to sell or a solicitation of an offer to buy any security or investment product or service. The information contained in this report is subject to change without notice. It should not be assumed RMD’s methods as presented will be profitable or that they will not result in losses. The indicators and strategies are provided for information and educational purposes only and should not be construed as investment advice. Accordingly, you should not rely solely on the information in making any investment. You should always check with your licensed financial advisor to determine the suitability of any investment(s)