Crude Oil - $$$$$$$$$$

Well, Crude Oil just wont stay down. Had an amazing week Sun - Thurs shorting crude oil but it was very difficult staying in the trades with the wild bounces. Well Friday I got my arse handed to me but came out ahead for the week. I knew that eventually the down trend would end and I would get pummeled when it did but thats the game.

Anyways the real question is what will happen next? I believe that the herd is looking for new highs. The one thing I noticed is that the inverse relationship with the Euro / Dollar on Friday decoupled as Euro was down and Dollar was up which usually forecast a downward bias / direction for oil but not on Friday as oil was up. Im not sure what to make of that but will be watching the Euro / dollar Monday to see if this decoupling continues. The dollar looks overbought here so will we get a pull back which would be bullish for oil? I believe that the folks that are long need to mark up oil so they can dump there holdings near the high. I will be looking to establish shorts again this week as soon as it gets overbought. My short signals are.........a 200+ CCI on the hourly, a touch of the upper BB set at 2.85 ST DEV, or a test of the recent highs at 119.90. A gap up Monday might do it as we closed at the high on Friday. I will also go short if it breaks the 13 / 20 / 34 EMAS to the downside on the 15 min chart. At the end of the day this looks like a text book distribution model......

As for the COT report open interest has been declining since it peaked on 4/15. I take that as a clue that some folks are thinking that party is almost over.



http://stockcharts.c...5585&r=4616.png


http://stockcharts.com/c-sc/sc?s=$USD&p=D&yr=1&mn=0&dy=0&i=p27642372795&a=135943877&r=7009.png

Edited by hedgehawk, 03 May 2008 - 08:01 AM.

Update of my USO top picking illustration

Just for fun.......and maybe helpful to others

hedgehawk, You are shorting a valuable resource that's vital to the world's economy. It's currently being rationed by price as CL supply has been stagnant for two years at best despite record drilling levels. Demand is stilling growing overall internationally as US demand is declining but emerging market demand is growing faster than US demand declines. I don't find any especially overbullish or top oriented indicators except a chart that continues to make new highs after each healthy small correction. There are plenty of CL bears all the way up and the media has been calling CL a "bubble" for over two years. The trend is up and there are plenty of fundamental reasons behind the chart. IMHO the right way to trade CL is buy pullbacks unless you're a VST trader.

Edited by Cirrus, 03 May 2008 - 12:59 PM.

"You are shorting a valuable resource that's vital to the world's economy. " Are you implying I am doing something unethical or against our society? Better than spreading rumors about investment banks having liquidity problems and shorting the stock and pulling my money out of the accounts to create a liquidity melt down. What I am doing is legal and I am exercising my rights to short oil in our free markets.......

I just keep wondering why most here want to trade a major secular to the short side. I wasn't saying it was unethical or wrong--just that the trend is your friend. You can do want you want and join all the small specs that are just coming off a near record short position. I think if you read my post the point was why do people keep playing against the trend with CL. I can understand a VST, which I mention. Not many CL bulls on this board nor have their been the whole way up.