Keeping myself honest, I've gone short oil in the last few minutes. why? because.
I usually have fun trading, I haven't had much fun for the last 5 to 10 days because the signals are all over the place. I need someone to hold me accountable monday, if I got this wrong.
well, i got impatient and went long oil early last week, but i must agree that i have been close market watcher/participant for many years now, and have never seen it so mixed up, and oil related stocks just not moving at all, no matter what crude does. early last week i figured gold the place to be per my weekly chart 'reading', within a day or 2 I wondered what i was thinking?? really confusing times. so chem we are betting on opposite moves. my gut just tells me the oil trade over next few months has, has, has to be easiest money ever???
Windsorvase, we may be on the opposite side of the trade for the short term, but long term I will be on the same side as you.
I don't know how long this trade works, and my job is not to guess it, just react to it as its happening and make modifications to my PM trading strategies because of the interconnected relationships.
The WTIC contract shows a menacing tripple top or head and shoulders depending on how you look at it. So, keep this in mind.
As Newscentral points out, if you are only ever long, you are excluding yourself from half of the potential opportunities that exist. I would argue, short positions can provide more opportunity than long positions. Why? long positions can take twice as long to provide the same amount of gain a short position does. It's the nature of the beast.
When I cover, I'll post it.
Oil is used in lots of ways. Many traders often look at diesel and jet fuel use as future GNP. This week there is the OPEC meeting on the 17th. The 18 billion job's bill is important for oil's direction as well as the US index of industrial production. The thing with Petro and inventory reports is that the large players will often do the opposite within a short time. Monday's are very difficult to trade oil. At least I have a hard time with it.
Chemaes thank you very much for your letter and taking the time to share your thoughts and feelings with me. Well said and very understanding.
Work backwards from the retail price of gas. In 1986, it was $1.29 a gallon. At 3% nominal inflation, 25% higher than reported by government's fraudulent indicators, in 24 years by 2010 it should have been $2.58.
It's about $2.95 or 15% above inflationary values. Therefore oil might be due for a 15% correction to about $70 a barrel, which five years ago was unheard of, extraordinarily high, gouging by oil companies.
15% is awfully thin to short. I wouldn't be long, but if it were a stock I held long, I'd sell April calls. Since August is perversely a accumulation month for oil, I wouldn't be short going into summer.
IMHO, oil is a short, short if you're gambling.
I agree, shorting oil into March and April, is typically not the best thing to do because these are the best two months of the year for price advance.
However, the market also has a way of making the greatest number of people wrong, when there is an expectation that the market "is supposed to do something".
I resolve both of those but not caring about either, and getting in when the signals say in and getting out when the signals say out.
Calculations can be wrong, my calculation is that there was a sell, and short signal Friday.
Maybe this helps some folk:
On Friday, RSI broke trend line which started Feb 14.
MACD, although a trailing indicator, rolled over Friday.
Chart has a look of either tripple top or head and shoulders formation.
On friday, wtic closed below the fast/quick money crowd's pivotal moving average.
Friday's negative candle closed below, not one, but the two previous days opens, with the low of the day failing to stop at any moving average that I care about.
If I continue to go on some people will think I'm a nut, nooo, I just see the world a bit different than others.
All in I had a 85% probable short scenario, but my brain was clouded for a minute by people on tv saying "this is the best part of the season for oil, we see $90 before we see $70."
Every single person who invests is a gambler, the only thing absent for investors are flashing neon lights, and a hostess bringing us a free cocktail at the table.
Perhaps there'll be a discussion on the degree's of gambling-investing.
My charts havent given me any convincing signals either - for 2-3 weeks now. I think its mostly because of Euro issues - everyone is moving volume into anything non-Euro - including commodities, dollar, and equities. When that smoke clears we migth get a picture of what is going on short to mid-term.
I am watching to see if the dollar bounces off the 50D MA or breaks through and holds - that would be a signal that might convince me to either short or go equities.
Keeping my powder dry for now.