Warning: Markets Reaching Extreme Leverage

The BLACK line represents the oil price, and the BLUE line is the Commercial net short positions. Right before the oil price fell from $105 in mid-2014 to a low of $30 at the beginning of 2016, the Commercials held nearly 500,000 net short positions. However, as the oil price increased from $42 at the end of September to $64 currently, the Commercials net short position increased from 350,000 to a massive 732,000 contracts:

In my video linked above, I mentioned that the technical analysis indicator of a shooting star suggested that the oil price may have peaked. Well, it looks as if this may be true, but time will tell. However, we can clearly see that the Commercials record net short positions provide us with evidence of extreme leverage against the oil price. I would not be surprised to see a $20+ decline in the oil price as the Commercials liquidate their short positions back toward more normal levels.

A $40 oil price is not good for the U.S. Shale Oil Industry.  I will be publishing a new video shortly on the ongoing U.S. Shale Energy Ponzi Scheme and the financial disaster taking place in the U.S. shale oil and gas industry.

Regardless, if the leverage in the oil market is reaching record levels, you should see what is taking place in some of the Dow Jones Industrial stocks.

Dow Jones Stocks Are Well Beyond Bubble Territory

I get a laugh when I receive emails from individuals who write me stating, “This time is different” in the stock market. They let me know that my calls for a bubble market and a crash have been overblown, severely overdue or simply, not true. While I am quite surprised at the longevity of this present bull market, my warning remains the same… THE HIGHER IT GOES, THE BIGGER THE CRASH.

Let’s take a look at some of the Dow Jones Industrial stocks and their price changes in just the past two weeks. As the overall market increased significantly since the beginning of the year, Caterpillar’s stock price increased from $161 to $170:

And if we remember my chart on Caterpillar from my first video, Stock Market Bubble vs. Gold & Silver, Caterpillar’s price was $137 on Nov 5th.  So, in just two and a half months, Caterpillar’s stock price is up a staggering 24%:

You will notice that Caterpillar’s stock price experienced several short-term peaks, but nothing quite like what is taking place now. Another impressive mover in the Dow Jones Index is Home Depot. While Home Depot’s stock price chart isn’t as remarkable as Caterpillar, it is also moving beyond bubble territory:

From 2000 to 2012, Home Depot’s share price averaged approximately $25 a share.However, on Jan 5th it was trading nearly eight times higher at $192. But, if we look at its current price, it is NOW trading more than eight times higher at $201:

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Cynthia Decker 2 years ago Member's comment

Good article, very well done. Interesting comparison between $UNH and $BITCOMP. But I'd say the former is a far safer bet. Plus #bitcoin has been crashing for the past month.