Oil Update - School is in Session
This oil trade - for all its losses - is becoming a hell of an educational experience. Who knew that different Bloomberg terminals would display different values for the Generic Crude Oil (CL1) 200 Week Moving Average? My terminal says 51.38, which crude is now below. On the contrary, my friend's is reading 49.70, and an analyst at Real Money is reporting 49.88. Despite the fact that my figure is looking like the incorrect one (we have a one-day delay on commodity prices, which may or may not affect a weekly MA), it is really negligible since the 200 Week MA is roughly coinciding with the psychological support at 50. Translation: if crude is going to dump any further, it needs to break through two technical barriers.
Today's lesson came from that same friend mentioned above. When the inventory report came out this morning, crude dropped to a new local low, erasing yesterday's gains in the process. As it hit 50.50, I was ready to pull the trigger and get out. That's when said friend - who has more trading experience and probably a hell of a lot more money riding on long oil right now - offered this piece of advice:
I took it as a rule and stuck with it. Sure enough, it held and closed at around 50.50. The 50 mark was tested briefly during the latter part of today's session, with a few prints in the 49.90 neighborhood. But the bulls held and brought it back to the 50.50 range almost immediately.
Can't wait to see how tomorrow pans out. I start every day these days by getting my Sell USO trade authorize, but have yet needed to execute. With the House passing a rollback on oil subsidies, we could see some fundamentally driven action in the Refiners and Oil Services companies. Keep in mind that the Senate has yet to pass this bill, and there is no guarantee they will pass it.
By the way, subprimes are on a losing streak again, and are back near their recent lows.
Unnecessary Disclosure: I am (still) currently long USO.
Today's lesson came from that same friend mentioned above. When the inventory report came out this morning, crude dropped to a new local low, erasing yesterday's gains in the process. As it hit 50.50, I was ready to pull the trigger and get out. That's when said friend - who has more trading experience and probably a hell of a lot more money riding on long oil right now - offered this piece of advice:
if the fundamental news didn't take out the recent lows immediately, then it was already baked into the price action (chart/TA) and unless the recent low gets taken out, then stick with the trade.
I took it as a rule and stuck with it. Sure enough, it held and closed at around 50.50. The 50 mark was tested briefly during the latter part of today's session, with a few prints in the 49.90 neighborhood. But the bulls held and brought it back to the 50.50 range almost immediately.
Can't wait to see how tomorrow pans out. I start every day these days by getting my Sell USO trade authorize, but have yet needed to execute. With the House passing a rollback on oil subsidies, we could see some fundamentally driven action in the Refiners and Oil Services companies. Keep in mind that the Senate has yet to pass this bill, and there is no guarantee they will pass it.
By the way, subprimes are on a losing streak again, and are back near their recent lows.
Unnecessary Disclosure: I am (still) currently long USO.
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