Oil Mania

You could feel the pain.  You could feel the pain of the shorts who got caught in oil.  You could feel the shorts screaming as oil rose over $16 in two trading days.

Perhaps we will hear news of failed hedge funds over the next week.

The bull market in crude continues as we enter the frothy part of the bull, aka Bubble 3.0.  Where and when it will end, I have no idea, but it will end, that I know.

For despite all the talk about the resilience of the US economy, at some point, something has to give if oil continues its relentless march higher.  There is a tipping point where the price of oil will drive the US economy into recession, and with it, the world economies. 

Is that level $150?  $175?  $200? 

I have no idea

But I do know that at some elevated level, I plan on buying deep, out-of-the-money puts on oil

At this rate, oil will hit $200 in October. 

Hmm, what has happened to stocks in October in the past?

And $200 seems to be a good point to bet against oil mania.

Other commodities such as nickel and wheat corrected 50% from their peaks.  Oil will be no different. 

This is an interesting time.

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