After 7 straight days up, Middle East stocks sank overnight on the heels of dashed hopes of an oil ‘freeze/cut’ deal. The end of the dead cat bounce coincided with the formation of a “death cross” in Bloomberg’s GCC 200 index which did not end well for oil or stocks the last two times…
The 50-day moving average crossed below the 200-day moving-average triggering the classic technical pattern known as the ‘death cross’. As Bloomberg notes, the last time the double bearish signal occurred, in August 2015, the index of the largest and most liquid companies in the six-nation Gulf Cooperation Council sank the most since 2008 on a monthly basis.
Gulf stocks fell for the first time in almost two weeks…
Finally, it appears oil prices have rallied over-optimistically, and with the failed talks coinciding with a ‘death cross’ we suspect oil will revert back – just as it did in July – to the equity market’s view of the outlook for the energy complex…