Bear or bull on oil market?

Pedro Montero · May 21, 2015

It is clear the US economy may not be benefiting from the collapse in oil price over the past 10 months.
The oil falls have direct impact on the US economy, thousand of workers are losing their jobs on oil industry.
It is not clear the price of the oil for the near future

Does have an impact over the oil and should we expect a bull trend line?

I am currently long on UWTI but the trend line is not clear, any thoughts?

romik · May 21, 2015

Pedro Montero said:
It is clear the US economy may not be benefiting from the collapse in oil price over the past 10 months.
The oil falls have direct impact on the US economy, thousand of workers are losing their jobs on oil industry.
It is not clear the price of the oil for the near future

Does have an impact over the oil and should we expect a bull trend line?

I am currently long on UWTI but the trend line is not clear, any thoughts?

Nobody knows for sure. I have connections to investment banking within the family and their buddies within the industry have contrasting opinions. Some call for 40, others for a drift between 50 and 70 and some believe because fracking companies will be declaring bankruptcy in drones will send crude above 80 and lock. So there you have it. Based on technicals, just price for now, on weekly bulls have stopped the bear, for now anyhow. The question is - what next?

dbphoenix · May 22, 2015

Pedro Montero said:
It is clear the US economy may not be benefiting from the collapse in oil price over the past 10 months.
The oil falls have direct impact on the US economy, thousand of workers are losing their jobs on oil industry.
It is not clear the price of the oil for the near future

Does have an impact over the oil and should we expect a bull trend line?

I am currently long on UWTI but the trend line is not clear, any thoughts?

The trend isn't clear because there isn't one. Except for a brief test of 2, this has been ranging since February, although one could consider the move up from 2 to the top of the range to be a trend. In any case, that trend is broken.

UWTI hasn't mirrored CL, though you have your own reasons for being long in it. You may be interested in the CL charts I began posting in February. At that time I focused attention on 56.

ScalperJoe · May 22, 2015

Pedro Montero said:
I am currently long on UWTI but the trend line is not clear, any thoughts?

Beware of the leveraged ETF/ETN instruments. Here's a paragraph from the prospectus:

"The ETNs are intended to be daily trading tools for sophisticated investors to manage daily trading risks. They are designed to achieve their stated investment objectives on a daily basis, but their performance over different periods of time can differ significantly from their stated daily objectives."

Here is even a bolder sentence from the prospectus:

"It is possible that you will suffer significant losses in the ETNs even if the long-term performance of the applicable Index is positive."

http://www.velocitysharesetns.com/uwti

It seems UWTI was a nice double off the March 2015 low, however it does not have to continue to rally at the same rate, even if oil continues higher, and that is clearly outlined in the prospectus.

You mention you are "currently long on UWTI" however as the op stated in the chart, that trend from 2 to 4 is now broken.

According to billionaire oil tycoon T. Boone Pickens, when oil falls 50% or more from its peak, which has happened six prior times, it rallies 100% off the lows each time. If history is a guide, then it puts oil in the mid 80's over time. Exactly if and when that happens is anyone's guess.

Laissez Faire · May 23, 2015

I was very bullish when oil was at $40 and already capitalized on it with a handsome profit to show for my brilliance.

More neutral at these levels, but definitely more bullish than bearish. In the end, oil prices will creep back up. At least that's what I think.

Handle123 · May 23, 2015

I got long USO in late January, took out a buck then was stopped out on rest, then re-enter on April Fools Day, took out another buck and keeping stops at breakeven plus a nickel. I don't have any opinion on instruments, just trade signals and eat bananas, am just a trading monkey.

Pedro Montero · May 23, 2015

I am long on UWTI because I am still bullish on oil.
I do not think the leverage ETFs is a bad idea when I think the oil will continue to rise.
Why trade USO or the oil future if we had the chance to open a leverage instrument?

romik · May 24, 2015

I see USD Index advancing as next oscillation, so crude to decline.

i960 · May 24, 2015

Pedro Montero said:
Why trade USO or the oil future if we had the chance to open a leverage instrument?

Because those ETF/Ns are based on the futures as their underlying? No point trading through obfuscated retail instruments when you can just trade the underlying.

ScalperJoe · May 26, 2015

Handle123 said:
I got long USO in late January, took out a buck then was stopped out on rest, then re-enter on April Fools Day, took out another buck and keeping stops at breakeven plus a nickel. I don't have any opinion on instruments, just trade signals and eat bananas, am just a trading monkey.

USO has decent volume and moves well with oil, as long as you don't mind receiving a K-1 statement and doing the extra paperwork during tax time (and this applies for IRA's as well).