Tuesday, December 8, 2015

Oil: How Low Can It Go?

Oil: How Low Can It Go?

The bottom is dropping out from under oil again. Crude tanked to as low as $37.50, undercutting the August panic lows and putting it back at levels we haven't seen since the depths of the Great Recession.

So how low can oil go? 

Well, now that we're taking out the August panic low, the next logical technical level to watch is $33. That's where oil bottomed out during the 2008-09 Great Recession.

It's not like oil is alone, either. Virtually every major commodity is under pressure. That includes iron ore, which just dropped below $40 per metric ton for the first time since 2009.

Bottom line: Oil should remain firmly on your radar screen as an investor. 

If crude drops sharply toward its Great Recession lows, that's going to put even more pressure on the broader junk bond and equity markets. 

It also tells us that the global economy is in more trouble than is generally appreciated.

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