For the last 3 weeks Crude oil has been range bound trading in a $3 range which for this commodity is flat. Futures continue to wander on both sides of their 8 and 18 day MAs. These two levels serve as pivot points as I am slightly bullish above these pivot points and slightly bearish under these levels. In recent weeks I have advised clients to be short futures while simultaneously selling out of the money puts 1:1 in May and June contracts.
My stance remains that we get a risk off trade that drags metals and energies lower. Metals have already started to break lower with gold off 6.3% in the last 2 ½ months, silver lower by 4.6% in the last 3 weeks while energies continue to push higher. Look for relationships and correlations for guidance…if and when a trade higher in the dollar resumes or if we ever get a break in stock indices I think the outside market influence could help push energies lower. I am not looking for a bear market but just a trade. I think futures could trade back to $92/93 barrel.
The recent uptick was on the dollar backing off which was an overreaction to the G-7 in my opinion. Also news that OPEC may be lifting global demand but that to me has been factored in and why Crude oil is near $100 and not in the mid 80's. If we make a new high those that are not hedged off with options would be advised to take their loss.
By. Matthew Bradbard
To discuss in more detail this chart or any other you can reach me at: mbradbard@rcmam.com or 954-929-9997
Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific's investor's needs or investment goals. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions ("Forex") before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results.
I have over 1 decade of experience in the Commodities industry. Managing my own IB for over 5 years and my own CTA for fifteen… More
