Every bull market has it's popular, cult like figures, and the most prominent one of this oil bull market is Boone Pickens. The bull market in oil dates a long way now, all the way back to 1998 when crude bottomed around $12 or so, and all bull markets get a little ahead of themselves and are subject to corrections.
We hit around $78 last year, and have fallen now down to around $50ish. The crude bears are out and strutting their stuff. Peter Beutel projects $20 crude in a couple of years. [I hear he's going to be interviewed in Playboy next month.. Nah, just kidding.]
Like the public marketplaces of yore, the markets of our day serve as a focal point for the public. Oil prices are now way, way down at $50~, and all kinds of sacrosanct technical trends have been broken.
The oil bulls are on the run!
For the offense of violating a trend, the market demands a sacrifice!
Burn a witch, maybe?
Even better - bring out the oil bull and give him a public lashing!
Obligingly, the media dragged Boone Pickens out today [out of his workout, no less] and dropped hints he'd been massacred in the recent selloff (Sample quotes: 'The sharp drop in crude-oil prices is goring T. Boone Pickens, one of the biggest bulls in the energy market.', 'We've seen a huge drop, more than 16% just in the first few weeks of this brand new year. A lot of people have been talking about that steep drop, and kinda wondering what that's meant for you, because you've been bullish for so long. There've been a lot of rumors out there in the market...").
Burn the witch, they cried! Get the oil bull!
This, I believe, is healthy.
Let the healing begin.
CNBC: Boone Pickens on Oil Prices.
WSJ: Energy Bull Keeps the Faith. [$]
PS. Boone Pickens says oil will average $70 this year and would find a floor around $48. My amateur seat of the pants impression suggests to me $45 would be a floor and closer to $60ish a good average through what I think of as a consolidation phase.