Crude Oil - Lets Make Some Money $$$$$$$$$$$$$

Folks, I been doing a lot of research on crude this week. I wanted to share with you what I found:

First of all, the rules have changed this last week. Before last week, directional indicators for crude were the dollar and crude inventories. Not so anymore. Now it is net crude imports which are at a recent high of 10.6m and declining heating oil inventories. They are watching net crude imports to see if refining demand is supporting of price (which it is), or causing diminishing demand (which is not happening). Watch this excellent video interview of Stephen Schorck as he explains the recent "rule" changes here from an interview on Bloomberg last week.

http://www.bloomberg...LO_3vv4amf8.asf

You can check the inventories and imports here:

http://tonto.eia.doe..._dcus_nus_w.htm

Second, the small specs got short big time last week now that worries me. Cuz stops are building in the 126.50 to 127 range so if we get some bullish news from this weekend they will jam it and get these small specs that are weak hands to cover which will be more fuel for higher prices.



Third, Heating oil has been outperforming crude oil and is a leading indicator however that is not sustainable.

http://stockcharts.com/c-sc/sc?s=$HOIL&p=D&yr=1&mn=0&dy=0&i=p59106342830&a=136032306&r=7368.png

Fourth, I am seeing the smart money sell into strength every time (distribution) on the hourly crude futures chart.



Fifth, I believe the record high volume on USO the last three days 35M+ (about double average) and the hanging man candle are indicating an exhaustive topping event.

http://stockcharts.c...0744&r=6873.png

So I will be watching all the above to find a short entry. If there is more Nigerian attacks or other news of this nature this weekend then I think they will blow the stops that are building above 126.50 and push for 130. If no news out of Nigeria then we can look for a break of Fridays low on Monday of 124.08 as a short signal.

Edited by hedgehawk, 10 May 2008 - 03:58 PM.

You can find Schorks bloomberg interview here:

http://www.energymar....com/press.html

click on following title under bloomberg:

"Oil Is Little Changed After Reaching Record on Drop in Supplies"

Excellent post.


I was getting bulled up on the same things you were. Refiner Demand (the reason I posted rising inventories was NOT bearish a few days ago- and got laughed at) and Small Spec shorts. However, that daily candle on Friday is scary now that I am looking at it over the weekend (you know how during the day the intraday stuff distracts the longer term picture).

http://www.traders-t...?...t=0&start=0




I really want to see the shorts blown out before they take it down. I'm just not seeing it. Other problems I have: I want to see 104.5-105 USO on a FIB Extension. But, like anything looking for perfect prices is foolhardy. Especially in light of the diverging price of oil drillers (any non integrated oils).

I think we're going to see 127 + on this, and then we could see a pullback into that 120.5 volume low area you can see here on the chart... There's nothing really bearish here... FWIW. What you want to see to confirm bearishness is a stronger volume test of some of these volume low candles just under 125. Otherwise, you are test pilot...

Semi, I think you might be right. This is a link to "The Energy Report by Phil Flynn" of Alaron Trading, free daily coverage of the energy market. He has a buy under 121............. stop 119.50


http://www.alaron.co...rgy_report.aspx

If the Euro still impacts the Oil trade, then there may be some upside for oil.

Euro (US$154.96) is now bouncing in a support channel and could tag 156 Monday.

Overall, though, the Euro's recent move down looks impulsive, which won't help oil prices.

http://stockcharts.c...8538&r=1981.png

Whatever it happens, even if the crude gets hit big (10-15% decline), the monster will be back by the end of this year to new highs since it simply needs a divergent high to have a long term top. Any top from here will be probably an IT top, but it can't be a LT top since the momentum is very strong in all time frames. We will see how the commodities and the general economy will top after Q3-Q4' 08. There is always a mania rally like it happened in Oct' 07, so my guess is even if the equities top first in Aug-Sep 2008, it will still need a divergent high in Q1' 09 before the total collapse. I guess bye bye to US LT bonds first, stocks next and finally to the economy with the commodities from here...

OTOH, if this is a speculative blow off, the short term cycles at a top...

It should respond rather quickly to the Fed's net drain from here...

Edited by arbman, 10 May 2008 - 08:38 PM.

Whatever it happens, even if the crude gets hit big (10-15% decline), the monster will be back by the end of this year to new highs since it simply needs a divergent high to have a long term top. Any top from here will be probably an IT top, but it can't be a LT top since the momentum is very strong in all time frames. We will see how the commodities and the general economy will top after Q3-Q4' 08. There is always a mania rally like it happened in Oct' 07, so my guess is even if the equities top first in Aug-Sep 2008, it will still need a divergent high in Q1' 09 before the total collapse. I guess bye bye to US LT bonds first, stocks next and finally to the economy with the commodities from here...

Could the divergent high take longer to come about?

One problem I've had applying ewave to the LT oil chart is handling a very large (350%) move in Wave1. In any self-respecting commodity, Wave5 should be at least 50% of Wave1. Yet, there's nothing on the chart that approaches this (yet).

So, possibly Wave5 is still to come. If Wave4 drops near smaller Wave4; and Wave5 is 50% of Wave1, then Wave5 potential is $152.

Of course, this isn't exactly a daytrade. We're talking about 2010.

From a technical standpoint, would that resolve the divergency issue? Or would it need to be resolved this year?

http://stockcharts.com/c-sc/sc?s=$WTIC&p=W&b=2&g=0&i=p37641969020&a=138946276&r=3275.png

Fedex will probably bottom as oil tops?!?