Our View: Oil Falls Into A Bear Market

Our View: Oil Falls Into A Bear Market

Our view, the S&P may have bounced yesterday but oil futures fell over 2.8% to $50.11 a barrel, down more than 20% from its January high and to its lowest level in a year as concerns of the coronavirus outbreak will cut China’s oil purchases Crude oils benchmarks continued to drop into bear market territory despite Saudi Arabia cutting production. 


On Friday the S&P had its worst drop since August and wiped out all of 2020’s gains but Monday’s bounce pushed the index back into positive territory for the year.  My own feeling is the decline is not over and yesterday’s rally was more short covering than new buying. That said I do not think the S&P is out of the woods yet. The ES tends to do what will screw most trades and right now that’s to continue to rally. As of yesterday’s close 425 people have died, there are 3,235 new cases in China from the coronavirus and 20,500 have been infected.

In most cases, the big ETF funds buy stock in the first few days of the new month and with so many people off-base I am not sure the rally is over yet. Our view is to sell the early rallies and buy weakness. 3275-3280 is an upside target we are looking at and on the downside 3230-3235 should act as good support.