Most in financial industry are acutely aware of Warren Buffett’s quote “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”. And as evident from the chart above, perhaps no market has more blood running through the streets right about now than the oil market and all related companies….even countries.
As a result, everyone and their day trading grandmother are looking for a bottom in an attempt to make untold riches when oil prices finally rebound. Oil Investors Keep Betting Wrong on When Market Will Bottom
This mindset leads me to a simple conclusion. There won’t be a strong rebound in oil price anytime soon. This move down appears to be more structural as opposed to technical in nature. Meaning, once oil finds its bottom, it might rebound 10-20% only to fall back and trade within a certain trading range. For many years to come. What gold did since its sell-off in 2012 would be a perfect illustration of that.
In other words, while it is possible oil will have a large rebound after it finds bottom, don’t count on it. Until and unless everyone gives up on oil and looks at it with disgust, it is unlikely to stage a large rebound, let alone a bull move.
