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250 comments on Saudi Arabia and that $1000 bet
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250 comments on Saudi Arabia and that $1000 bet
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There are many ways to make an analysis.
I prefer charts.
If Saudi oil production were a stock, we could easily find a "rising wedge", which is very bearish for production.
Top beginning Jan. '98
Bottom beginning Jan. '02
If I knew how to upload the pic...
Graphs of the market measure human reactions in group situations. A chart of production is about geology, not human reactions (though there may be some recession/geopolitics embedded in the graph). If geology follows a graph, it would be something like a hubbert graph - not a 'rising wedge'.
Technical analysis in the market doesnt work anyways. Most people that look at charts dont make money doing so but recognize a certain pattern that worked in the past or they read about in some technical analysis book. They remember the times it worked and selectively forget about the times it didnt.
Any market chart pattern can turn into any other chart pattern and usually does.
Well, I think Geology determines where 50% is - the point at which the absolute top is reached. Not HOW we get there. Not HOW we leave there.
If you look at the oil production graph of the WORLD, you will notice that it followed a bell shape until 1974. And then?
It formed a left shoulder:-)
And did it then return to the bell curve?
No.
Why? Price restrictions, political restrictions, infrastructure restrictions. This has NOTHING to do with geology. This is what you call "human reaction" (hate to mention it, but it would concur to CERA's above ground factors).
I happen to see all this on a chart, just like I called September 2003 as the start of the oil bull market. Why? Because of the price chart (in combination wiht the fundamentals of PO and Chinese demand and especially because of the sustained price pressure after GWII was quickly "won"). My father, an old oil man, didn't believe me.
I am not going to defend chart techniques, which is more of an art than a science or whatever.
BUT I would refuse right now to BET on Stuart's conclusion that SA has maxed out because I need a confirmation from the chart - a rising wedge can break in both directions, and it has not broken yet. It is approaching its lower support line.
For what it's worth..
"They remember the times it worked.."
The problem with a lot of chart technic is that it is best seen in the rear view mirror. Sound familiar?
Besides, let's just test the hypothesis. Here's the chart:
As a trader, I would not bet on SA's fall until the line at the bottom is broken. I have a fundamental idea (call me Stuart, convinced that production has peaked) but wait for a market "signal" to make the trade..
Now, how about historical information in a field that is very humanly driven (factor "human reaction")? I'm using a much greater time frame, basically comparing apples with oranges in the two charts:
Like I said, for what it's worth..