Slope of Hope Blog Posts
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As of this moment, my optimal scenario for the nearby NYMEX oil price calls for a period of stability and/or a recovery rally that grinds into the 80.50-82.00 resistance area prior to another downside pivot that presses the price structure to new lows beneath 75.71 on the way to 70.00-65.00 thereafter.
At the risk of missing such a downleg in the absence of the anticipated recovery bounce, I will watch from the sidelines for a while longer prior to deciding if I should commit funds to a short position — in the ProShares UltraShort DJ-UBS Crude Oil (SCO) — into NYMEX price weakness (though always a hazardous strategy to short oil into weakness).
That said, only a rally that sustains above 82.00 will neutralize the imminent threat of another plunge in oil prices and the U.S. Oil Fund ETF (USO).
Originally published on MPTrader.com.
The purpose of this post is to explain the opportunity I see on the long side of this market.
Since May 2011 top, supply has overwhelmed demand for stocks aided no doubt by fears of Europe collapsing and the US downgrade. During this time period, the only way a bull could have made money is through excellent timing or holding one of the few stocks that are higher. On the contrary, the only way a bear could have lost money is through timing errors or poor stock selection.
Recapping recent market movements is simple, from January 1, 2011 through the end of July we vacillated between 1250 and 1350. Then in a period of approximately 2 weeks, we plunged 250 points, and now we are in the range of 1120 and 1220 with recent EKG-like lurches to the upside and downside of the range.