Smooth Sailing?
I have been out most of the day, but when I got back to my desk, I couldnt help but notice something, so I wanted to just quickly post a short update here….
No guarantee of Smooth Sailing, but this weekend I posted this chart to alert us to the fact that MANY went short OIL and thought OIL was breaking down. I said that in 2008, the same thing happened and posted this.
$WTIC 2008 Struggle under the 50sma, false break down to new lows.
Currently we had a similar chart for OIL, and everyone from the Wall Street Journal to CNBC were saying that OIL is going to the $30’s. I posted this…
I was alluding to the idea…
If we break to new lows, MANY would go short.
– Could we break down to the $30’s? Yes.
– Could we reverse & trap the shorts like 2008? Sure. Time will tell.
So it was “lets wait & see.”
Well MINERS often reverse Before GOLD, and ENERGY STOCKS definitely bottomed before OIL in the recent sell off to lows. DO YOU see any reversals in ENERGY STOCKS?
Look at REXX, EXXI, AAV, SD, DNR, NOG, PQ….etc etc etc
XOM, CVX , CVC, CHK, & more for higher priced stocks
NOYE: I may be early, but I took a couple smaller positions in EXXI, REXX , because I can place a stop below todays lows and they are bullish engulfings with OIL at new lows.
I am NOT saying this will be smooth sailing. LOWS can be tricky , and take a look at prior bottoms and lows, they can bounce around, they can shake one out of positions. You still have time to enter later this week when things may be a little more certain. If this is a double bottom low for oil, some of the others that havent reversed yet will likely follow (SFY, GDP, etc)
I just wanted to alert you to what I am looking at this afternoon. It is possible that It was the correct thing to do in looking at the Charts of 2008 lows, and not CNBC or any other Emotional news media : ) Again, Time Will Tell. Best wishes…
~ALEX
Also interesting to note:
Reversing while OIL is at lows is also the XLE.
I tried to answer all of the questions from the wkend thread. Going to grab Dinner soon, TTYL.
Alex,
Depending on the open tomorrow would you consider a few Calls on BP or USO with a stop below todays low ? Or are we a tad early for that amount of risk ?
Hi Ken,
I do not think we are too early, but that doesn’t mean that we wont drop & reverse today/ drop & reverse tomorrow / drop & reverse Wed and Maybe the FED Wednesday causes the reversal to stick. Sometimes trying to put a low in has that battle of the Bulls / Bears – but we are in the timing for a daily cycle low in oil.
I have been charting & will point it out in tomorrow mornings report.
Actually Ken,
Look at the chart of $NATGAS and you’ll see what I mean by reversal after reversal candle (So it goes sideways).
Alex, thanks for the update. I’m ssill short crude, but stops above break even. Will likely exit tomorrow ahead of Fed, whether it moves up or down. I really expected gold/minersto bo6nce last week if they were going to do it, but seems that next 2 weeks may be in play? Fed mtg a lot of headline risk, all over one silly word, ‘patient’ but reduction of risk in commodity and $$ sensitive plays may be prudent.