Well-Coordinated Plans May Seem Like Acts Of Desperation

Releasing 30 million barrels, less than 5% of the U.S. total strategic reserves, was not an act of desperation. Actions without a plan suggest desperation. This action was designed to create technical selling by weak hands at key support. That it did. As discussed yesterday, panic selling by weak hands provides the liquidity necessary for strong hands to regain control of the market without influencing price. This well-coordinated plan had purpose that will be revealed by future money flows.

Headline: Releasing Oil Reserves Called a 'Sign of Desperation'

The announcement by the US Department of Energy and the International Energy Agency that the latter would be releasing 60 million barrels of government-held stocks, immediately increasing global supply by nearly 2.5 percent, is "a sign of desperation. You don't do this if you have anything left in your arsenal," Mark Fisher, founder and CEO of MBF Clearing, told CNBC Thursday.

"This is a psychological mechanism. I think that in this case, the government is bringing a knife to a gun fight, when in reality there's only an 'x' amount of supply," Fisher said.

Source: cnbc.com