@williamdscroggins I want to make sure it's clear, I'm not saying oil prices are "range bound" as in a *trading* range. I'm not talking about the trading range of the last two months that brohicious was referring to.
What I'm talking about is that *fundamentals* cap the upside approximately in the low to mid 60s, high 60s at the absolute most, and limit the downside approximately in the mid to low 40s, with the outside possibility of high 30s at the absolute lowest.
So I'm not now saying "Hey, look! We're at the bottom of the range! Time to cover and go long." This slide has plenty of more room to the downside, and in fact I think the bottom of the recent trading range is likely to be broken in the next few days. If production doesn't start decreasing soon, it could go back to the mid 40s, the point at which all shale projects are underwater and OPEC production cuts loom on the horizon. From there, the downside will be just as limited as the upside is limited in the low 60s.
"the ones who celebrate their own erudition and treat the market like an essay writing contest"
You're probably not clear on the term, since you don't seem to be clear on much of anything, but that's the essence of what "inferiority complex" means. You project motivations onto other people that reflect your insecurities about your own inadequacies rather than any genuine insight into those people's motivations.
I'm here to discuss financial markets and trading (Hello?? Isn't that the purpose of these boards?). Like it or not, I write in the manner that comes to me naturally, not as a result of carefully planning out essays and selecting wording that I think will impress others.
You regard it as a celebration of my erudition and treating the market like an essay writing contest because seeing intelligent discussion that's beyond your abilities makes you feel small, but you don't want admit that to yourself, so you insulate your ego by turning it around and projecting pompous motivations onto the people who write it.
But your comments about me and other people you resent simply for having a greater ability to contribute to discussions than you do are a reflection of your own feelings of inferiority, not those people's actual motivations.
"tend to flame out very quickly. "
LOL...take a look at my posting record, I've been doing this for nearly a decade. Made my share of rookie mistakes early on, but learned from experience. It may make you feel better, in a petty way, to fantasize about me flaming out, but I'm going to be quite happy to disappoint you. ;)
Let's make sure we're clear on the terminology, because I get the impression that you're applying a common misuse of the terms contango and backwardation, in reference to upward and downward sloping futures curves, respectively. Those are properly called "normal" and "inverted" curves, respectively.
When I say "contango" and "backwardation", I'm talking about *actual* contango and backwardation, which refer to the prices of futures contracts relative to expected future spot prices. In a contangoed market, futures are priced at a premium to expected future spot prices, and in a backwardated market they're priced at a discount to expectations. Contango is primarily the effect of storage costs; backwardation is primarily caused by anticipation of short term supply shortages.
While a normal (upward-sloping) futures curve is a disadvantage to futures ETFs, due to the effect of rolling over contracts to successively more expensive contracts, contango/backwardation are more significant. That's because in a contangoed market, futures contracts underperform spot prices regardless of which way prices go. Whereas the theoretical advantage of an inverted curve is useless in a non-backwardated market, because without backwardation an inverted curve is necessarily caused by anticipation of a decline in price, and that decline negates any gains you may get from rolling over to cheaper contracts. And keep in mind that the market can still be contangoed even when the futures curve is inverted (what you seem to be calling "backwardation").
With inventories near record levels and drawdowns during peak driving season too small to alleviate the glut, the chances of oil futures going into backwardation are just about nil. Contango is here to stay for the foreseeable future, even if the futures curve becomes inverted (which can only happen if the aggregate opinion of traders is that prices are at an unsustainable level), and will continue to eat away at the NAV of oil ETFs over time.
Contango has narrowed somewhat, but I don't think it's all that small. The slope of the futures curve was less steep when prices were in the 60s (at the time when you posted this), I contend that this wasn't due to lower contango, but due to an aggregate expectation among traders that the price would decline (a valid expectation, as we're now seeing).
*eye roll* Spare me your inferiority complex.
I looked through your posts and they consist almost entirely of peanut gallery style catcalls like this one. You don't seem to have much substance to contribute, on any board.
There's no need to be snide just because you know that a celebration of *your* intelligence couldn't possibly be cut too short (zero words would be an appropriate length).
I didn't do anything either, which means I just kept holding my short position (DWTI). I'm even more glad. ;)
If the EIA report confirms this tomorrow, or even comes in flat or shows a drawdown of less than 2m bbl, oil prices will go into a tailspin for the rest of the week.
I really think there are only two ways to play oil right now:
2. Wait on the sidelines
Not gonna happen. I suggest you cover your short when it drops below 55. If you're a gamblin' man, maybe hold out for the low 50s. Anyone who stays short below 50 (if it even gets there) is a fool. Anyone who stays short below 45 is a nut job.
Regarding "goofy people" running the company, here's an excerpt from a Seeking Alpha article published on May 18:
"Impressive Management Team, Few Competitors
President and CEO Robert Greenberg, MD, PhD has over 20 years of experience in the field of retinal prosthetics. He has conducted numerous pre-clinical and clinical trials that demonstrated the feasibility of retinal electrical stimulation. He has served as a medical officer and lead reviewer for the U.S. Food and Drug Administration in the Neurological Devices Division, and he earned his medical and doctorate degrees from The Johns Hopkins School of Medicine.
Chief Financial Officer Thomas Miller joined Second Sight Medical in May 2014. He was previously CFO for Ixia, and he has held senior financial positions at CoCensys. He earned an MBA from the University of Southern California and a B.A. in economics from the University of California, Berkeley.
Currently, no other company has designed and successfully brought to market a prosthetic device that provides solutions to blindness caused by retinitis pigmentosa. Several potential devices are in the process of being developed."
Keep in mind that this is from an article that was recommending *shorting* the stock because the 180 day lockup period for pre-IPO shareholders was about to expire. Also keep in mind that anyone who followed that advice got burned badly. But the point is that even this article recommending shorting the stock had nothing but praise for the quality of the management team.
Do you have anything of substance to back that up, or do you expect people to make trading/investment decisions based on some anonymous clown arbitrarily shouting out the word "con"?
You called it a scam on April 1, when it was at 12.50, just before a spike to 15.60, which sold off but was followed by a runup to 17.5 (over 18 pre-market). Perhaps that was an April Fools joke, but what's the deal this time?
Why? The small weekly drawdowns haven't been boosting the price (nor should they). It would take a major surprise to move the price up. Something like a drawdown of 8m bbl or more.
"dont say it cant happen"
I'm saying it won't happen. Period. Not in the foreseeable future.
"it was 36 a barrel in the 2009 collapse market"
Actually, the 2009 low was just under 33/bbl. But saying "it was that low before, therefore it could be again" is as logical as saying "It was as high as 148/bbl in 2008, therefore it could go to 150 soon". Neither the circumstances that drove it up to 148 nor the circumstances that drove it down to 33 could be replicated or paralleled any time in the foreseeable future.
Mid 50s is inevitable. Low 50s is reasonably likely. Going back to the mid 40s seems unlikely but not inconceivable. 30? Not a chance. I've been saying it all year and I'll say it again: 40 is the absolute floor for oil prices. In order for it to go below that, the entire global economic picture would have to change drastically, and not in a way that can unfold in a matter of a few months. A Greek default won't do it. I guarantee you, you will not see oil prices under 40 between now and the end of 2016. And that should NOT be misconstrued as a prediction that it's likely to happen after 2016, I'm just refraining from making predictions about two years into the future.
*shrug* I don't claim to have the prescience to know how far lower it will go, I just know it has explosive potential, so I keep accumulating in small lots the lower it goes.
Frankly I don't think there's any way for anyone to tell what the trend is at this point. It was a great day trading stock for a while, but I"m done with it. The technicals are ambiguous, it could go either way and I don't see any reliable basis for predicting.
FWIW, I'm out of this stock now. My price target for dumping the calls was 105, and we hit that in the first few minutes of the day. It could go up further, but it's too iffy right now. I'm off to fish in other ponds.
BTW, EYES pulled back, I think it's a great buying opportunity right now. Read up on it, I'm convinced that stock is going places. But it might take a while, it's a long term buy & hold deal.
"THe longs promised oil at 70 or 75 by the end of JUNE"
LOL...maybe some of them did. When I went long in March while prices were in the mid-40s, I promised that prices would head to somewhere between 55 and 60 over the coming months heading into driving season, and that after that I was planning on selling out. Well, guess what happened?
Since then I've been repeatedly shorting every time it goes above 60 and taking some profits every time it dips. I keep holding a core position, though, because I think at least the mid-50s are coming again soon. I wouldn't touch it on the long side unless it goes at least as far down as the low 50s, though.
"Shorts believe we'll revisit the lows. Also not going to happen (at least not before the fall)."
I completely agree. It's not going to the 70s, and it's not going back to the 40s, any time in the foreseeable future. The fundamentals have oil prices so hemmed in on both sides right now that it has become unbelievably easy to trade, if you can see what's going on.
LOL, maybe he's right for once. This stock seems to have a frustrating inability to hold gains. I'd think this stock is for investment only, but it seems to get treated like a trading stock - every time it spikes, it gets sold off for short-term profit-taking.
"As a new investor"
That's the key right there. Only people who are new at this pay attention to Cramer. It doesn't take long to figure out that taking advice from Cramer is a great way to go broke.
Those who have been at it longer might remember how Cramer was pumping AAPL at the 2007 peak over 200, then told people to sell when it went down to 130, then said to buy when it bounced to the 160s and 170s, just before it crashed all the way down to 80 (these numbers are from before a 1:7 split)...and how around the same time he pumped GOOG in the 600s and 700s and then said to sell as it was bottoming out in the 200s (numbers from before a 1:2 split)...and pumped RIMM near the all-time highs in the 130s and then said to sell in the 30s, just before the beginning of a series of dead cat bounces to the 60s, 70s, and 80s, and in the long
And of course there's his all-time winner, pushing BSC (Bear Stearns) HARD in the final weeks before it became insolvent, as it was plummeting down through the 70s and 60s, and even on the day it crashed from 60 all the way to 30 and opened at 2 the next day. Then he tried to backpedal by claiming that what he said not to panic and pull out of Bear Stearns, he meant the assets, not the stock, and he's sorry if some people misinterpreted what he meant. Pretty glib, considering that his show is about stocks, and it goes without saying that unless otherwise specified he's talking about stocks. And then Jon Stewart nailed him by airing clips of him specifically recommending buying the stock a week or two earlier.
"WTI will definitely go up"
Is there any particular reason you think that's so definite?
Above 60, a substantial percentage of shale projects become profitable. That in itself limits the upside. Also, OPEC is determined to kill that disadvantaged competition, so they'll fight tooth and nail to keep prices below 60. Meanwhile, economic growth forecasts, both U.S. and worldwide, are being slashed right and left, which limits demand, while production is showing no signs of slowing down, especially at prices this high.
Furthermore, storage is still a concern. The recent inventory drawdowns are not only *entirely* the effect of peak driving season, they've been *smaller* than the seasonal increase in demand attributable to driving season (~7-10m bbl/wk) every single time. That indicates that unless production starts slowing down in the next couple of months, we can expect a return to inventory buildup in the fall, and by "slowing down" I mean it has to actually start decreasing, not just increase at a slower rate.
For the foreseeable futures, the upside is capped by fundamentals. Any time the price ventures into the 60s, the 50s will keep pulling it back like a magnet. Count on it.
"need to be patient though"
How patient? If you mean on a scale of years, maybe so, but in a time frame measured in years, even if WTI prices do eventually go up in a slow, jagged trend, USO is still a losing prospect because all the gains and then some will be eaten by the contango monster.
"Institutional investors trying to shake retail loose."
If you keep believing that, you'll be bitterly disappointed. It's not a shakeout. Oil is just as strongly bounded on the upside as on the downside by fundamentals, and when it's above 60 there isn't much potential upside left. I'm pretty sure the price will fall below 57 in the next couple of weeks, and unless production starts to pull back significantly, it's a near certainty that we'll see low 50s this fall.
"big players whose analysts are always telling us how oil is collapsing, but who always still seem to have some oil futures of their own"
Which big players are you referring to? The ones who have futures of their own regardless of where they think the price is headed because they actually take delivery of the oil, perhaps?