About the only things I didn’t have to deal with today were famine, pestilence, and locusts. Just about everything else took its best shot at me. But enough of me.
Two things about crude oil that has to be reinforced to you in a big way: 1) play the range of volatility, and 2) beware the reversal days.
We had a double reversal today in crude, with an early low followed by the day’s high, and then a sharp sell-off into the day’s low in mid afternoon trading. Like I said yesterday, somehow, someway the range gets put in; not always is it obvious from earlier in the day.
Like yesterday, we had a small break near the open. With only a 100 point range, it was the second break I was looking for on a buy signal from the algorithm. “Sorry vegas, no can do!”
As we went to the highs, I finally got long, and at that point I liked the markets chances of going even higher. The market immediately went on a 14 minute 50 cent sell-off that did some technical damage to my prevailing bullish attitude. At this point I knew I had one chance to get out at a profit, if in fact the high had been put in at 108.69.
When the market rallied up to challenge the high, it had to go through like a hot knife through butter. It didn’t. It got as high as 108.64 [bid], but the very next tick was 108.61 and I was out. A few hours of mindless chop, and the sell-off picked up steam as we broke through 107.75.
It really comes as no surprise that after a huge run in the last 15 days, we get some long liquidation from position players. Trees don’t grow to the sky. You should notice though, that these sell-offs really have no power beyond a few minutes. Yesterday’s $1.25 / barrel sell-off lasted 23 minutes; today’s was about 28 minutes for about a $1.50 / barrel. In other words, there really isn’t any sustained selling; it’s all stops. That could change of course, but for now once the stops are out of the way the market drifts higher.
My experience tells me we can’t go higher until we get lower prices in Europe, followed by an early low in the U.S., and then some kind of power move up. The 31.8% fib retracement, of the 3 week rally, comes in at about 105.60. Keep your eye out for that level as good support.
As I stated over on my other post, “Weimar Ben” is in front of Congress tomorrow. There could be fireworks if he makes it clear more easing [and printing of money] is on the way.
Until then, stay disciplined.
Have a good day everyone.
-vegas
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