Christopher Carolan, Editor On Time Update 2 December 2004 Open
OIL FOLLOWS BONDS
Crude oil undid two weeks of base building in one day. Our daily oil trend flipped two notches from up to down within the context of a down weekly trend. That’s exactly the same situation that bonds produced earlier this week. In both cases, these sell configurations occur at visible support, making most traders reluctant to take the position here. Move to short crude oil at the market at today’s opening price basis the January future. Use a $1.50 stop on the position.
Now’s a good time to reiterate the importance of adhering to stop levels on recommendations. Our break even stop on the crude oil long prevented a significant loss on that position.
Lower the stop on the short bond position to 111 16/32 basis the December future.
Both the U.S. stock market and the German DAX index improved their daily trends to neutral. With their weekly trends already positive, these are buy signals for theses markets. The signals are not as strong as those for bonds and oil, so I believe the better profit opportunity is in the debt and energy markets.
Our trend type of analysis works when markets exhibit clear trends. The 135-minute trend chart worked fantastically well in the September 1- November 1 time frame, before being whipsawed badly for the past 30 days. Fortunately, we have enough other tools to complement the trend analysis, the result being we utilized the trend work profitably when it was working, but it hasn’t produced losses during the whipsaws.
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