Last week i posted that i was getting short crude oil based upon the weekly chart you see below.
This chart has provided me with a number of good trades over the past 2 years..like this one from 3 weeks ago.
To me this chart is really much more than oil. It could be the road map to the eventual unseating of the Putin regime in Russia. This occurring either through peaceful democratic regime change (doubtful) or through a contrived war designed as deflection from the deteriorating Russian domestic situation. As bad as it sounds it’s looking more likely every day that Putin is ramping the rabid patriotism, nostalgia for WW2, Stalin worship and the rest to a real military confrontation with the West.
Earlier this week George Soros wrote that the Putin regime cannot last 2-3 years with oil below $100. He’s right with one caveat.. Putin has Russian culture all set to gladly accept real war as a fact of daily life. And with this he will merely replace (for a time) the petro economy with a war machine.
Who will pay for this? This is where Putin benefits on a few fronts. The oligarchs will be fleeced one by one and as they fall individually the fear among those remaining will only increase the competition of loyalty among them to Putin. Putin also gets his war machine and with that vastly increased popularity at home as a “war President” fighting the western aggressors. The oligarchs will fall over themselves demonstrating their generosity in giving to the war effort and set a good example for the general public to do their part as well. This combined with “one time emergency” taxes and domestic bond programs will make good little self-perceived martyrs of every man, woman and child.
But again, this will only work for a time. Eventually Putin is going..and it won’t be pretty. Taking down Russia (and possibly Ukraine) with him is really his only choice here.
In the mean time he will need a trigger. Something so offensive to the average Russian that a full scale invasion of Ukraine will be demanded. Putin has been known to use false flags in the past and this will probably be the case again. Here’s an article i wrote on this subject in March of 2014 that’s worth a read.
Putin is cornered and this will probably get ugly.
From a trading angle I’m still short the ruble and oil and as of two days ago short the high multiple indices such as Russell2000 as i posted here.
USD should benefit from any further deterioration of the situation, world markets will suffer and a stronger USD is not what the market needs at this point.
Here’s the USD..
Old resistance has become support. Higher floor should mean higher ceiling or breaking of that ceiling..
All this and world indices all sitting at very long term resistance levels. Maybe we wait until the autumn to get the hammer.. But it’s coming.
The best charting teacher I know: