IT IS STILL ALL ABOUT THE DOW
Here is a market that I am bearish on currently, Crude Oil. The real question is can anything actually decline in the midst of the monster bull market in stocks? There was a comment about correlations in a prior post. I try to ignore them in all honesty because it is really no way to trade. However, in this wacky world where the FED is just pile driving asset prices upward, it is hard at times not to consider what is going on.
On this chart you can see a great COT sell setup in Crude that is in place right here. Prices stopped right when the big boys starting selling. I think the most likely reason we have traded sideways here instead of breaking is the overall up trend in asset prices that is floating all the boats. I can tell you I had a ton of open equity the other day in a bunch of shorts that evaporated when the 10 point ES decline got reversed. This is a pattern that has played out in movie theatres all across the world since the 09 low. I do not know when or if it will end, but I am not worrying about it anymore. I have to take the trades that meet my rules, and if they don't work due to that so be it. There will come a time when the stock market does not rise every single day, and I don't want to miss a big one by arbitrarily throwing in some dumb rules about correlations.
I have stated this before, but to do it again, the way to use correlations is just to determine percentage of risk in your account, not to filter trades out. Most trades are the same as each other be it soybeans or currencies, so just trade fewer contracts when trading multiple positions. Crude looks good to me here on the short side so I am trying to find a way in here this week.