John Kilduff was right for a week and maybe he is going to be correct for many weeks to come. But I beg to differ. I think crude oil has a pretty much strong support at $120 and I am still pretty much bullish about crude oil for many weeks to come. Many "oil topping" articles are starting to pop up but I don't really buy the story actually.
Like I have said previously, oil can form a dark cloud cover and maybe we will see further weakness in oil price. However I still can't stand on the bear side from what I am seeing. I wish to give a firm stand and not a two way stand to protect my a**. I think oil may still go down but it will not be breaking $120. This week can only be seen as a profit taking week after all, inventories were down pretty badly. Also, I believe oil shoots up too fast towards $130 compared to how it broke through the $110, $120 barrier. On a whole, the commodities bull run will still continue even though it is becoming a bubble soon.
Basically the chart does not look like a topping chart to me. I like how oil behaves on friday. At most I can see a three inside down forming and maybe oil will move to $120.
Why I think Dollar will still go down1. Chart wise, I can only see a three line strike happening. Dollar has been down for three consecutive weeks and this week is just a profit-taking week for those dollar shorters. This is what I derived from the chart.
2. Fed will not increase interest rate. Why? Because inflation data is still not that bad after all, just look at all the cpi reports =D. Of course if you bring in headline inflation then its another ball game.
3. So far so good. Despite all the gloom and doom news about recession, GDP is still positive, in fact it was revised upwards (even though I think US is already in a recession, Buffett also said so).
4. This is a bit of feeling and alot of fuzzy logic. Fed has gone through so much of rate cuts, ignoring everything about oil, dollar weakness in the process. I highly doubt that they will not wait for a clearer picture before raising rates. Consumer confidence is still pretty bad.
What to BUY or SELL?
Ok basically I had a terrible week. Misfiring from everywhere. I will try to rectify those mistakes and hopefully things will start to pick up.
We want to play the oil story. I find movement of SPC very interesting so I take a look at its chart. Somehow SPC always has a consolidation period, where it goes sidewards for a while before breaking up or down. Irregardless of what oil price behaves (I mention above that maybe oil will go to $120), I want to short SPC. I believe it is breaking out of the consolidation part; volume is good as seen by the peak below.
Short SPC for the week. If it hits $6 real fast during the week, cover your short =D. I think I was freaking bearish for Olam last week and it killed in the end.
Nice and short post. Hopefully I can reduce putting lengthy posts in the future as well. Look out for mid week post, I should be posting interesting stuffs.
The only way you get a real education in the market is to invest cash, track your trade, and study your mistakes! - Jesse Livermore
1 comment:
Being contrarian is always good.
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