47 replies to this topic

[SilentOne]

Wow. Oil retraces 50% of its 9 day decline in one day? Added some shorts again and will add tomorrow as well. Looks like a "B" wave or wave 2 rally. cheers, john

[mss]

The MMs and SPCs forgot to short, and had to have that chance

[SilentOne]

$150 by July 4th. Heck 150 on Monday. I added to my oil short again. Looks like all air to me. This is one emotional market. I'll keep positions sizes relatively modest. cheers, john

Edited by SilentOne, 06 June 2008 - 10:12 AM.

[PorkLoin]

Serious parabola time.

[SilentOne]

Serious parabola time.

No ********.

I have no idea what happens next week, but you have to know how this is going to end (when it does). Exhaustion phase. I'm short again and I have no doubt this will ramp up more. I was so close to playing the oil bull HOU.TO, the bull oil ETF on Thursday. What a finish to the week it had.

More later.

cheers,

john

Edited by SilentOne, 07 June 2008 - 09:20 PM.

[SilentOne]

Welp, here is the fundamental explanation of what is driving the oil and commodity markets lower. I'd like to point to GREED, because it encompasses everything that has happened in the last 2 years and it only takes one word to describe.

You have to know, I wouldn't shed a tear if GS gets taken down.

cheers,

john

Bailing Out The Oil Market
--------------------------------------------------------------------------------



William Pentland, Forbes
09.23.08, 11:35 AM ET

While everyone knows the U.S. government is looking to bail Wall Street banks, few people realize that it's also bailing out speculative oil and commodities traders in the process, fueling a sharp rise in energy prices.

Lehman Brothers (nyse: LEH - news - people ) and AIG (nyse: AIG - news - people ) held enormous trading positions in commodities markets. If those positions had been liquidated suddenly, the price of everything from wheat to oil would have collapsed. The Commodity Futures Trading Commission, the main regulator of U.S. commodity markets, allowed Wall Street's investment banks and trading companies to take control of massive positions in commodities markets called swaps held by Lehman Brothers and AIG.

The result: Oil prices spiked by a whopping $16 per barrel on Monday, the largest single-day rise in oil prices ever.

"If speculators were forced to liquidate their positions, oil would easily be $65 to $75 per barrel by the time the liquidation was complete," said Michael Masters, the founder of Atlanta-based hedge fund Masters Capital Management. Tuesday, oil was trading at $108.74 in midday trading in New York.

For all the talk of OPEC, the biggest threat to high oil prices in the short term might be the implosion of Morgan Stanley (nyse: MS - news - people ) or Goldman Sachs (nyse: GS - news - people ), which would trigger a massive number of low-priced oil-futures contracts to flood the market all at once in search of buyers to liquidate those contracts.

"If either of these entities were to collapse, we believe the downside for commodities would be tremendous as these companies unwind positions," Valerie Wood, president and owner of Energy Solutions, told Platts on Monday. "In particular, we know Goldman Sachs has large investments in crude oil and natural gas commodities because its own Goldman Sachs Commodity Index fund [comprises] about 39% crude oil commodities and about 6% natural gas commodities. A liquidation of GSCI shares would directly result in the selling of these commodities, and selling pushes prices lower."

Ironically, the biggest losers turned out to be the traders who bet that at least one of the victims from this month's financial chaos would be forced to liquidate a major long position in oil prices. When they avoided that fate, the race to unwind those bets that oil prices would fall before the end of the trading month caused a massive rally in oil prices.

The market meltdown has revealed the full extent of Wall Street's influence on commodities prices and, especially, their role in energy markets. More than $40 billion in cash has poured into commodity markets since the start of 2008, according to a report by Standard & Poor's. The total amount of investments in commodity indexes is estimated at between $150 billion and $270 billion. In other words, new investments in the market have climbed by 15% to 25% in less than a year.

In 2006, the U.S. Senate's Subcommittee for Permanent Investigations had already reported "there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices." The trouble is that so much of the trading happens in so-called "dark markets," unregulated over-the-counter electronic exchanges where trading companies buy and sell energy derivatives, that this role is hard to document.

Investment banks make money off commodities speculation, but are just conduits for hedge funds and institutional investors that have taken large positions in commodities markets as a long-term investment.

"The market dynamics induced more and more financial players to move into commodities markets," said Fadel Gheit, a senior oil analyst at Oppenheimer & Co. "It was a perfect storm. The Federal Reserve was cutting interest rates and people were running away from the dollar as it lost value. Hedge funds, pension funds and mutual funds started pumping money into commodities because they were the safest place and the safest of them all was crude oil. There were too many dollars chasing too few physical assets. That's the bottom line."

Edited by SilentOne, 29 September 2008 - 10:56 AM.

[SilentOne]

Guess I should have stuck with that oil short. At least we are not on the wrong side of this one.

cheers,

john

http://bigcharts.mar...&mocktick=1.gif

[SilentOne]

Long crude? After a $90 decline, it's worth a punt. Been buying today HOU.TO under $7.00.

Note the double long DXO here recently. Volume and divergence as crude puts in a lower low today.



May have to endure a test lower next week, but I will likely add more on that.

cheers,

john

[SilentOne]

Took profits on HOU.TO this morning. Not very convincing overall when I look at gold/silver, and equities. A trade is a trade. The only way forward for some time to come. Will study another entry. cheers, john

Edited by SilentOne, 10 November 2008 - 10:09 AM.

[SilentOne]

I have been day trading oil now and then looking for an eventual long entry since my last effort. An important cycle is the 22 - 23 week cycle for crude. A 45 - 46 week cycle also seems to be prominent. And finally we have a ~90 week cycle. All these cycles appear to be heading for a good bottom here in the very near term. This should provide a good bounce in the first quarter of 2009. You can see that the last 90 week cycle (Hurst used a nominal 80 week for equities but oil seems to go a bit longer IMO) hit in early Jan. 2007. I wish I had been more actively studying oil Hurst cycles then.

I should add that when crude topped out just as the last 23 week cycle low came in, that was extremely bearish. One sees this in hindsight of course, but this is a big tell regarding cycles. Some refer to this as an inversion, but really all it means is that the 23 week cycle was headed down from that June low until the next 23 week cycle low which is due now. It is also the larger cycles for crude oil that are now pointing down that made this an extremely bearish time for crude (add the fact that it blew off in a parabolic climb as well).

Last Jan. we saw the 23 and 46 week cycles bottom together to form a nest of lows. Now we have the more important 90 week cycle low forming here with a 23 and 46 week cycle lows. This market is bearish though as the 3.5 - 4.5 year cycle is pointing down. It likely last bottomed in Jan. 2007. The next 3.5 - 4.5 year low for crude is due in 2010 sometime.

So if you are going to buy oil at anytime in the next 2 years. This period into Jan. will be likely be your best entry on the long side as the cycles and seasonals are now in your favor.



I have purchased some HOU.TO, the Horizon Beatpro Nymex Crude Oil Bull at $2.04 today. I will be adding more into Jan.

Have a merry Christmas everyone.

cheers,

john

Edited by SilentOne, 23 December 2008 - 01:23 PM.