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SPDR S&P 500 ETF Message Board

hedgehog25 10 posts  |  Last Activity: Apr 28, 2016 4:12 PM Member since: Aug 1, 2007
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  • hedgehog25 hedgehog25 Apr 28, 2016 4:12 PM Flag

    Technical analysis is dangerous for people who don't understand it, or those who look for the patterns they want to see. It always makes me roll my eyes when people start shouting out technical patterns that haven't fully formed. A partially formed (unconfirmed) chart pattern has ZERO predictive value. Every upward price channel creates multiple partial double tops on the way up, and every downward price channel forms multiple partial double bottoms on the way down.

    Even if it reaches the previous top and starts to pull back a bit, it still isn't a double top. Why can't some people get it through their skulls that it's not a double top/bottom until it breaks the trough? A double bottom like a W, and a double top looks like an inverted W (in a font where the middle is lower than the sides). Looking at the WTI chart, I see a double bottom, confirmed at the beginning of March.

  • hedgehog25 hedgehog25 Apr 28, 2016 4:09 PM Flag

    I think the next pullback will bottom out between 38 and 42, if it comes soon. If the rally continues to the upper 40s before a pullback, then it might only pull back to the mid 40s. If you're looking for 32 again with U.S. production in a sustained downtrend, you're going to be disappointed.

  • Reply to

    Short again at $10

    by mikiecrusher Apr 6, 2016 12:01 PM
    hedgehog25 hedgehog25 Apr 28, 2016 3:45 PM Flag

    Thanks. I do want to make it clear, though, that I'm not making any KINGCALLs by any stretch of the imagination. I don't think the conditions exist for a long term bull market, I just think oil prices overshot to the downside to fundamentally unsustainable levels, and it was inevitable that they'd bounce back to at least the mid 40s.

    I wouldn't be surprised to see the uptrend continue and crack 50 heading into driving season, but it's not obvious enough to me to be worth betting on. I *would* be surprised to see 60 anytime in the next few months, and might jump back in on the short side if that happens.

    I think equilibrium now is around the mid 40s, and prices will keep being pulled to this level like a magnet, as they have for the past year. The equilibrium price might drift up into the 50s, depending on how long and how deeply U.S. production continues to drop, but a bull market is not in the cards because the upside is still capped by the same fundamentals that made prices crash in 2014-15, and there's no good reason to think those fundamentals are going to change in the next few years.

  • hedgehog25 hedgehog25 Apr 28, 2016 3:19 PM Flag

    Good call. I stayed long after the inaction at Doha too. I've been saying for a while, it's not all about OPEC and producers' meetings and coordinated cuts!

    As I mentioned at the time, when Saudi oil minister Al-Naimi said a couple of months ago that the market will rebalance oil supply and demand, leading to higher prices, what he meant was "We don't need to cut, because low prices will force cuts by higher cost producers, especially U.S. frackers, Why should we voluntarily give up market share when other countries will be forced by economic law to cut production instead of us?"

    Well, U.S. production has been down for 7 consecutive weeks, 12 of the last 13 (the only exception being a lousy 1kbpd increase reported March 4th), and has been in a sustained overall downtrend since July. Throughout this downtrend, rig counts have continued falling, even recently while prices have bounced back into the 40s. This downtrend is NOT stopping anytime soon.

    That said, I did take half my position off the table yesterday and switched the other half from UWTI to UCO, and I think maybe now it's time to sell out altogether. A bounce from sub-30 to the mid 40s was obvious, but it's more iffy going forward. I do think it's still in an uptrend, but it looks ripe for a pullback soon.

  • Reply to

    Bad Weather in Houston...record rains

    by ag_spoon Apr 18, 2016 6:51 PM
    hedgehog25 hedgehog25 Apr 18, 2016 8:35 PM Flag

    I don't know why either. Are you new to this board? rexmundixed is just a noise machine. Keeps saying USO is going to 0, as if oil is going to be produced at a loss and given away for free. He reminds me a lot of hyperinflation_hyenas from the SPY board.

  • hedgehog25 hedgehog25 Apr 18, 2016 7:32 PM Flag

    Depends on how long it lasts. Reports I've read say it's a 1.5 mbpd daily hit. So, for as long as the strike lasts, that takes care of the entire oversupply problem and then some. And with oil prices still in the toilet, producers have a diminished incentive to cave to the strikers' demands.

    It's a fallacy to say that if the war hasn't boosted oil prices, it somehow follows that the strike won't. First of all, prices *have* been trending up recently. Do you have a gauge to measure exactly how much of that can be attributed to the war at any given time, so that you can rule out any significant impact?

    Second, the war hasn't significantly disrupted production as of yet, so at this stage any effect it has on price is based on fear that there might be supply disruptions in the future. The strike has a direct, immediate, definite, measurable impact on supply. Its effect on price isn't based on anticipation of what *might* happen. It's based on what actually *is* happening.

  • Reply to

    after this expected sell off

    by caseus_865656 Apr 17, 2016 7:13 PM
    hedgehog25 hedgehog25 Apr 18, 2016 7:19 PM Flag

    Good call. Well, it's down, but just barely. Too bad for a couple of testy people, that clicking the thumbs down button on Yahoo doesn't change reality. ;)

  • Reply to

    strong resistance at $40.70

    by blotechproflteer Apr 11, 2016 3:04 PM
    hedgehog25 hedgehog25 Apr 11, 2016 3:23 PM Flag

    The technicals as I see them are pointing to a likely breakout from here. The Doha meeting being a week away, with all indications that an output freeze is practically a done deal, makes that even more likely.

    What you're describing is more typical of the way oil usually trades during uptrends, so I can't rule it out, but I think under current circumstances the best strategy is to just hold. It *might* pull back a little or might not, but either way it's almost definitely heading higher. So it makes more sense to hold and *maybe* have to ride out a temporary pullback before gaining more, than trade on the assumption of a pullback and possibly miss the boat.

  • Reply to

    DOUCHBAG ALERT! - DOUCHBAG ALERT!

    by janitorsfinest Apr 6, 2016 2:01 PM
    hedgehog25 hedgehog25 Apr 7, 2016 12:23 AM Flag

    LOL, that's nothing! A year ago kingly was saying that buying USO at 20 and 21 was "a no-brainer" and "easy money", and that it was heading to 23 and beyond "very soon".

    Later it was easy money at 19...and then at 18...and then at 17....

  • Reply to

    Short again at $10

    by mikiecrusher Apr 6, 2016 12:01 PM
    hedgehog25 hedgehog25 Apr 6, 2016 11:43 PM Flag

    Very bad idea. The recent pullback was not surprising, but I think this time oil prices are really set to take off.

    As I've been saying for a while was inevitable, the low prices have forced a trend toward declining production, without coordinated action. For a number of reasons, crude production is very slow to react to prices, and this is true in both directions. Now that US production is in a sustained downtrend, the contraction isn't going to stop anytime soon. It certainly won't be curbed by prices in the 40s, or even a temporary excursion above 50. Given the recent history, the entire balance of the oil market would have to shift sustainably before there would be any significant wave of new investment in production.

    Meanwhile, production from several OPEC members has started to show signs of decline even without coordinated action. The fact that low prices are limiting production anyway is all the more reason why OPEC is very likely to agree to a freeze at Doha. They really have nothing to lose and everything to gain from an announcement of "agreeing" to do what is happening anyway that would boost the price of their product.

    Furthermore, not just today's EIA report but also the reports of the last few weeks, if you look at the details, indicate that the trend of rising inventories is leveling off and likely to change direction. And if that's already happening now during the low season for oil consumption, driving season is likely to resolve the glut.

    I think oil is going to the upper 40s and very likely will poke above 50 in the next few months. I wouldn't even think of shorting it even for a quick technical pullback at least until it test resistance around 43.50, but really I don't think I'd consider a short position again unless it goes above 50 (subject to an assessment of where the industry stands at that time).

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