Oil triggers stops below US$40 and makes fresh post-GFC lows, ASX futures down 14 points

Those traders still gripping onto long WTI crude oil trades at US$40 were forced to let go last night, as prices pushed steadily lower to close out US session at around US$37.50 per barrel. This is the lowest price for WTI crude since early 2009, and I'm guessing that if it breaks another 50c-100c or so lower than its previous 2015 low (which was US$37.73), then we could see another quick wave or stop losses give it another push lower by a couple of dollars. Once those sellers have been flushed out and noise from the recent and inconclusive OPEC meeting subsides, there could be a bounce - but who knows. I don't think there is a quality trade set up here, the first chart is more just an insight into this market's current behaviour for those who might be holding oil stocks.

Today's second chart shows the French CAC 40 futures bouncing around, and aside from the friction that the ECB announcements caused last week, France is being hit by another front - the National Front to be precise. That's the name of the far-right political party formed by Jean-Marie Le Pen and presided over by his daughter Marine Le Pen. The fear created by the 13 November terrorist attack on Paris has helped the National Front win 28% of France's regional council elections, and the whiff of populist movement support in Europe harks back to the European debt crisis that peaked in 2011, while the last thing Europe needs right now is political parties drunk with popularity and little chance of being able to engage in regional cooperation on economic reforms.

Finally the third chart shows the ASX 200 meandering its way through its post-August range of 4,900-5,350, but again clever investors should not be focusing on broad ASX performance. I know that there are a lot of you who have broad exposure via big fund managers and maybe some of you have investments in ETFs or other instruments that track the ASX 200, but right now this is a really crappy index to follow. It's near-50% exposure to finance stocks makes it a concentrated strategy if followed, and I urge you to follow Rivkin Local's Model Portfolio if you are a long-term investor. 2016 will be a big year for strategy development at Rivkin and we want to help kick off a narrative that aims to test the pointless adherence to ASX 200 returns and present even more ways to gain returns that have a low correlation to this index. 


Source: Rivkin, Saxo Bank

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This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

This article contains information about CFDs, which are considered complex financial products. Please click here to read ASIC's "Thinking of trading contracts for difference?" document before considering an investment in CFDs.
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