World Waits with Bated Breath - Doha Summit Outcome

Will they, will they not? That is the moot question that investors, especially oil traders are asking around the globe. And 'They' are the major oil producing countries. These countries will go into a huddle to decide whether they should announce a production freeze on crude output so as to restrain the supply of global oil or not. With supply side contained, these oil producing nations expect oil prices to  increase.

In Doha Summit there will be 12 OPEC nations participating, with Libya abstaining. Iran will attend but will  send a delegate instead of its Oil Minister.. Others attending are Saudi Arabia, Iraq, UAE, Kuwait, Angola, Algeria, Equador, Indonesia, Qatar, KSA, Venezuela

Seven non-OPEC countries have been invited. Out of these seven, Russia, Bahrain and Oman are sure to attend. Mexico will send its observer. It is not clear whether invitees Azerbaijan, Norway and Kazhakstan will attend or not.

That this Summit is bound to fail has already been discussed in my previous post How will this Sunday be - Black or Grey?. But some important aspects which need to be kept in mind are mentioned below :-

1. This exercise of Doha Summit for Production Freeze of Oil output was a ploy by Saudi Arabia to stop Iran from hiking production. 
2. Iran has called the bluff of Saudis by insisting that it wants to ramp up production till pre-sanction level of 4 million barrels per day is achieved
3. Saudis have cleared their stance of not signing any treaty without others, specially Iran agreeing..
4. Iraq cannot stop production hike as its economy is in shambles and needs extra money for its army to carry on its campaign against Islamic State.
5. Saudi Prince has threatened to increase production by 1 million barrels per day, if there is no production freeze.
6. Most countries are already pumping out oil at their maximum capacity, except Iran and Iraq. So production freeze summit is just an eye wash.

Be that as it may, the very news of no production freeze coming out of the summit will make oil to crash to 35 USD per barrel over the coming week. At that level oil should find support again, since some sense will prevail over oil traders that Oil Production Freeze Summit at Doha was just a charade, and nothing more.

How will this Sunday be - Black or Grey?

Yesterday my call-to-action in US markets was for booking profit at 17900/17950 in Dow. Check it out here. That call was given before the markets opened. Dow opened at 17925, reached a high of 17938 and finally closed at 17987, down by 29 points from last closing.

Trade in US markets was testimony to the confusion that prevails in trading community. Tug-of -war of sorts between bulls and bears, if you may! This situation of uncertainty is mainly due to a divided house on how Doha Meet on Oil Production Freeze will pan out coming Sunday.

Frankly speaking I have no hopes from Doha Meet of major oil producing countries. This aspect I had covered in my last post Bears Sharpening Daggers - US Markets in Danger of Bear Grip

How can you expect consensus from a motley crowd with divergent geo-political interests and views? Some of these countries have been serious adversaries for a long time with ethnic and sectarian undercurrents. And we are supposed to pin our hopes on a consensus from them? Not me.

What we can expect tomorrow is Black Sunday, as Doha Meet winds up with no production freeze. I say Black Sunday because that will galvanize a furious sell off in oil prices. Presently equity markets are moving in tandem with oil market, and hence I leave it to you to draw conclusions. Since equity markets are not decoupled from oil prices, I expect a mayhem in US stocks.

The best case scenario is that the sell off in equity markets takes place in slow motion. Big players may choose to exit their positions in a classical "Distribution Process" so that they can obtain reasonable price for their huge long positions.

So you may witness very high volatility with spurts of buying interest emerging and trying to draw eternal bulls into a bull trap. That is the shade of grey for you!. Keep out of markets and watch it from sidelines till dust settles down. I will keep you posted and immediately inform you as and when that happens. Be safe, be happy - adopt a no-trade strategy for the moment!!!

Bears Sharpening Daggers - US Markets in Danger of Bear Grip

There are grave dangers for bulls in US markets. I had cursorily mentioned about a clutch of them in my earlier post What will topple markets - Crude, China or Cameron?

This post is a call to action before opening bell for all those who are long in US markets as per my recommendation. It is serious and urgent situation and I shall give detailed reasons in succeeding paragraphs.

Bears are gleefully whetting their hatchets and tomahawks, waiting for markets to open. So the wise thing to do would be to square off all long positions between 17900/17950 in Dow.

I agree that you would feel cheated if Dow was to surge northwards, but it is better to take profits off the table. Remember we had built long positions as per my advice at 17400 in Dow. If you take profit at 17900 you still would have accrued 500 points in Dow.

Massive resistance in Dow Jones exits at it's long term selling zone of 18000/18200. No need to take extra risk in hope of collecting 100 Dow points more, with dark clouds gathering on global stage. These dark clouds are in shape of  following events lurking round the corner:-

Doha Meet on Crude Output Freeze. 

1. On Sunday Oil producing countries are coming together at Doha for a Meet on Crude Output Freeze. Iran oil minister says he will miss Doha meet. Saudi Arabia indicated that it won't support any output freeze accord unless Iran signs. 
2. Iran - Saudi rivalry will not allow any ouput freeze.
3. Iran has rejected call for output freeze because it wants to attain pre-sanction output of 4 mln brls per day.

Long and short of the above inputs is that there is likely to be no cut or output freeze on crude and hence oil prices will start falling from next week. This will negative for stock markets which will see bears taking firm control of markets.

China 

1. US is stationing warplanes in Phillippines this week as vanguard of a major deployment there. This is in response to Beijing's assertiveness in South China Sea. US deployment is seen as a means of alleviating tension in the region. 
2. Tensions are escalating as United Nations backed arbitration panel in The Hague prepares to rule in a case brought by Phillippines against China's maritime claims in South China Sea. This is due to concerns over China's construction of artificial islands in South China Sea and its recent deployment of weaponry on a disputed island. China's grand strategy is to use the world as one big supply chain.
3. China's love for madcap dictator of North Korea and his antics.
4. China's slowing growth, likely property bubble burst and debt burden on its banks can be reasons for global economic tremor.

Any or all of these reasons can surface over the weekend to sour investor sentiments in the market.

Cameron & Brexit

1. Referendum on Britain's exit from European Union (Brexit) will take place on 23 June 2016.
2. Last week Saturday thousands of Brits swarmed the streets of London demanding Cameron's resignation in light of Panama Papers leak. The papers linked him to having invested at one point in offshore funds his late father had created. 

Over the weekend any adverse news on these fronts can make the markets tumble with banks leading the down-slide.You would agree that in such a scenario there is no point in showing bravado, if you are a bull. Exit from your long positions as US markets open today.

Thrilling Race To 18000 in Dow - Will We Witness It Today?

US markets gave a captivating performance in last trading session. Dow rose from a day low of 17742 to a day high of 17918, finally settling down to close at 17908. That is as bullish as you can lay your fingers at!

There were a couple of compelling reasons for such a fascinating journey northwards in US equities. Most compelling reason for this bullish lift off was JP Morgan coming out with good results. While the street was expecting poor show from financial institutions, out came results of JP Morgan sweetly surprising market participants.  Bears were caught unawares and got painfully caught in a bear trap.

Well that seems almost history now. Dow Jones has marched majestically towards its psychological level of 18000. Now the most important question is - will Dow achieve 18000 in trade today? I think it will, although Dow should open flat. As of publishing this post, European markets are marginally up and Dow Futures is also slightly up. Oil after being in red has shown strength and entered into green territory, which is good news for bulls.


If Dow misses 18000 today, I am sure traders will take the index to this important level before going on weekend holiday.

But what after that? After Dow reaches this psychological level, we should be on a look-out for correction. So we must exit all our long positions in Dow. I must admit that Dow may go even higher than 18000 before correcting, but that will be taking high risk. I say so because 18000/18200 in Dow is a strong resistance zone. Keep watching !

What will Topple Markets - Crude, China or Cameron?

Global markets across Asia and Europe are in supreme bullish fever. Everywhere there is welcome green, and that too of deep hue. Dow Futures is 89 points up. But crude is down. which may prove to be a spoiler in trade today.

Judging from situation US markets should open with a gap up. After all it has to reach 18000 destination. Check it out in this blog post.

In this wonderful bull run starting mid Feb 2016, there has to come a time for meaningful correction. Traders will take some excuse or the other to book substantial profit.

Will that excuse be provided by Crude or China or even Cameron? We will intensively investigate and analyse that in my next blog post. So keep lookout for in-depth analysis of impending correction in US markets in this space.