Time to Short Oil

Quote from gharghur2:

"OPEC President Edmund Maduabebe Daukoru predicted Sunday that oil prices would fall from their current high of just over $75 a barrel to stabilize in the "upper fifties to lower sixties" as political tensions ease."

The president of OPEC predicting prices will fall :)

That's like Exxon saying; "We're going to flood the world with oil to drive down the price. And we don't care about profits!"

Maybe a little pullback, then $80 next stop...
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Hey tony, they can pump all they want to flood the market but crude is still headed higher because of the coming decline in the USD.

http://www.peakoilportal.com/html/peak_oil_production.html
 
What happened to all the reaction to oil being quoted in Euro's?

Wasn't that happening last month sometime? and wasn't Iran behind that?
 
Quote from Lights:

obviously there is event driven risk that could spike, but assuming all things relatively unchanged, oil could retest sub-70. the run up on speculation already happened. currently, the system cannot handle $3.00 gasoline and $70 crude is subject to public and media outcry. alot of bulls here...
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Agree! A little lower to maybe $68.50 or so is possible. But friday's low was close enough for the week ahead.
Events come and go, and one never knows in advance how the market is going to react. However, waves progress. And, right now it looks to be heading higher before lower.
 
Quote from MrsSavant:

What happened to all the reaction to oil being quoted in Euro's?

Wasn't that happening last month sometime? and wasn't Iran behind that?
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Crude oil in Euro's?
Doubt if it will ever happen.
Might cause a crash in the US Dollar, and nobody wants a currency crisis in the US with all the 10yr/30yr bonds these foreign central banks are holding.
The Dollar is the worldwide currency for Crude.
 
i can hold my tongue no longer.

in the past 3 months on elite - i have read posts

"time to short silver" at 9,10,11,12

"time to short gold" at 50,500,550,600

and now

"time to short oil" at 50,60,70, 80

what are the strongest things in the market, in the world right now??? silver, gold, oil. commodities. So what compelling reason is their to short them? Not to be nasty. Trying to help. WHy not short something weak?or rangebound even at the top of the range (not my style but frankly, this makes more sense to me then shorting the strongest things in the world).

i know its human nature to cheer for the underdog and my understanding is that this "underdog" mentality is the route of countertrend trading. I used to to make this mistake myself and not to sound self righteous - but i'm cured and doing much better as a result. trying to pick tops is a sickness worse than any std or parasite. pure evil

could you maybe get lucky and catch a few percent pullback on a dip in oil, silver or gold? . absolutely. but i promise you, as a rule, jumping in front of these trains will cause you more sorrow then you can ever imagine.

if you want to short something - short something that is weak on a rally. you want to go long something - go long on something that is strong on a pullback.

this works in all timeframes. and i know some of you more nimble traders think you can fade strong trends because you are good ps2 players on the keys - but its a fools game. i call it the "spandex rule" - just because you can - doesnt mean you should.

what is a pullback in a strongly trending stock or commodity? typically - it's a) people who a paid up/paid too much and are in pain when the price goes against them aka weak hands or b.) people who got in early who are locking in profits. once this selling subsides and the weak hands and profit takers are gone - who is left to sell??? nobody. that is why entering on a pullback - if you know how to do it is a good strategy. gives you an immediate opportunity for price appreciation with nobody selling to get in the way of the uptrend resumption.

i promise you that the highest number of trading careers that have been ruined have been done taking countertrend trades.
i also know that i am talking to myself for no reason as whoever has it in their minds to take a countertrend trade in the strongest of all markets is going to do it with me on the soapbox or not.

i could pontificate further on why silver,oil and gold are strong, but will spare you!!!!

best

nne
 
NNE

Appreciate your understanding of the markets.

Freight trains only stop at scheduled intervals, pause for a while and then resume their route. Such are most of the major markets of today.

Scalping on the other hand went out of vogue in the late 19th century. Many here on ET think they have discovered something new. Actually what most have discovered is the law of the absence of friction: spinning wheels.

Fading I thought occurred when something was exposed to light for too long.

Don't get me wrong, some have very sophisticated technical tools and do very well, in what we used to call "churning".

However, going countertrend to a strong moves can end careers.
Scalping the wrong markets can empty bank accounts.
And fading the faders can wipe you out in one day.

I have two rules: don't short a bull market, and don't go long in a bear market. Actually I guess it's the same rule. Appreciate your comments, they are well understood in this corner.
 
Quote from niceneasy:

i can hold my tongue no longer.

in the past 3 months on elite - i have read posts

"time to short silver" at 9,10,11,12

"time to short gold" at 50,500,550,600

and now

"time to short oil" at 50,60,70, 80

what are the strongest things in the market, in the world right now??? silver, gold, oil. commodities. So what compelling reason is their to short them? Not to be nasty. Trying to help. WHy not short something weak?or rangebound even at the top of the range (not my style but frankly, this makes more sense to me then shorting the strongest things in the world).

i know its human nature to cheer for the underdog and my understanding is that this "underdog" mentality is the route of countertrend trading. I used to to make this mistake myself and not to sound self righteous - but i'm cured and doing much better as a result. trying to pick tops is a sickness worse than any std or parasite. pure evil

could you maybe get lucky and catch a few percent pullback on a dip in oil, silver or gold? . absolutely. but i promise you, as a rule, jumping in front of these trains will cause you more sorrow then you can ever imagine.

if you want to short something - short something that is weak on a rally. you want to go long something - go long on something that is strong on a pullback.

this works in all timeframes. and i know some of you more nimble traders think you can fade strong trends because you are good ps2 players on the keys - but its a fools game. i call it the "spandex rule" - just because you can - doesnt mean you should.

what is a pullback in a strongly trending stock or commodity? typically - it's a) people who a paid up/paid too much and are in pain when the price goes against them aka weak hands or b.) people who got in early who are locking in profits. once this selling subsides and the weak hands and profit takers are gone - who is left to sell??? nobody. that is why entering on a pullback - if you know how to do it is a good strategy. gives you an immediate opportunity for price appreciation with nobody selling to get in the way of the uptrend resumption.

i promise you that the highest number of trading careers that have been ruined have been done taking countertrend trades.
i also know that i am talking to myself for no reason as whoever has it in their minds to take a countertrend trade in the strongest of all markets is going to do it with me on the soapbox or not.

i could pontificate further on why silver,oil and gold are strong, but will spare you!!!!

best

nne
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This is all good stuff...I would like to ask though...at what point would you call all the mentioned markets, bear markets. How do you know the difference between a pullback and the start of a new trend?
 
Q:at what point would you call all the mentioned markets, bear markets. How do you know the difference between a pullback and the start of a new trend?

Personally, I like to marry a bit of fundamentals with my technical analysis. For instance, i feel good about trading afformentioned ( oil and silver and gold ) right now because:

Oil: geopolitical issues, supply risk due to hurricanes, nigeria, iraq, iran. huge world demand in china and other. plus , you kind of sense acceptance that 100+ $ oil is going to happen.

Silver: store of value, demand has outstripped supply for 20 years, massive short squeeze occuring (500 million ounces short), etf coming onto market, world is running out.

Gold: all of above. short squeeze. world demand. failiing usd. etc

Plus commodities in general have been underpriced so long that there hasnt been a lot of compelling reasons to produce them. As a result, nobody has been investing in production and supply is limited. A gold exploration takes 8 years and about a billion dollars to begin producing gold. oil refineries too - oil was only 10$ a barell not that long ago.

I spend a lot of time on analysis of my markets - but these are a few reasons anyway....

Three ways to enter a trade long or short. I will focus on longs but opposite is true of shorts:

1.) breaking out of consolidation. why?? in consolidation there is a fight between buying and selling.longs and shorts battling in a range. frustration. when consolidation is resolved to the upside -what has occured? capitulation!!! breakout!!!shorts are fubed. shorts cover why?? because they are in pain. what does this do? It creates demand along with demand from new buyers (momentum players ). Trend has resumed. Shorts who hung on are now panicking and typically get out at the worse possible price/time because they cant take any more pain. This is when a stock rises fast . This is also, incidentally, the stupidest place in the world to get long Why? because you are holding the bag my friend. And this is when we get what?????? A pullback. Profit takers see weakness and bail. Latecomers to long party see losses and bail. Weakhands shake out. Experienced buyers step in - this is the second way to get on a trend#2:

2.) Pullback into Previous consolidation. In the breakout example above - lets say the price pulls back to where the breakout occured. This was previously resistance and now is support. Why? this is where 2 things happen. a) the shorts who got burned when it brokeout in example # 1 and were stupid enough to hang on until it pulled back into their price are doing what? covering. buying. creating demand. why? because they want to get FLAT.like taking a hearty poo- always a good feeling when you have been in pain to get out exactly flat. stupid. but human nature. we have all done it. who else is buying? smart money. buy on the dip guys and those who liked the initial break out price but missed the breakout are back. when uptrend resumes - you jump on . jump with the train. if you are wrong here or in scenario #1 - there is plenty of buyers (shorts trying to get flat) willing to bail you out so your risk for entry is low.

3.) And the answer to your question is, a second higher high or lower low is the third way to enter a trade. Alternatively, you could use this to pick a top if you were so inclined. ie stock/issue trending up pulls back into consolidation, fails at consolidation, bounces and then resumes selling - where that second lower low begins is where you enter with a stop at the top of the pullback (lower low). Technically, a second lower low in a stock or commdity in the timeframe i am trading is where a reversal may begin. I also like the idea of using a retracement (30% retracement is healthy to buy a pullback. 50% is iffy) of the primary trend you are looking at as a rule of thumb.) , but again, i am never looking to pick a top or bottom - plenty of meat in the middle of the move

I know guys who enter a #4 way countertrend on a parabloic move - which there are rules for too. but they all have jobs now which sucks.

THis whole cycle happens over and over and over.In every timeframe. In every product. So if you focus on where the strenght/weakness is in the market and know how to buy a pullback - and place a stop in a sensible place - the world is your oyster.
Hope this makes sense and is of some use?!!
 
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