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Monday, January 28, 2013

CRUDE OIL TO TUMBLE?



Crude Oil is interesting to me right now and you can see why in the chart above. The net COT Commercial position is drifting down toward the level it reached right before the last two big declines. What I find even more bearish than that is that it is taking place at a much lower level in price that the last two times.

Typically you see the commercials defend certain price levels at similar levels in their net positions. What we have happening here is a willingness on their part to take up large positions at lower and lower prices. This should be a bearish situation. It is also quite surprising to see how weak Crude has become in relation to the Bernanke 500 ( formerly known as the S&P 500 before he took over trading it ). 

We are likely heading to new all time highs in the DOW yet Crude is languishing far far behind, SURPRISING. The decoupling is finally happening after several years of incredibly tight inter market movements. We are also seeing the dollar decouple from the stock market which is also refreshing. If we stay decoupled it will provide far more trading opportunities that are not so tightly tied to the stock market directly and every 5 minute bar on an ES chart.

Here is a trade we just completed in the trading service in Gold. I may have exited this one too early but there were 3 nice days in a row down and we had a nice gain, so using some discretion I decided to exit the trade. There is something about 3 day bursts that although it does not test out mechanically, seems to be a good spot to exit short term trades.



Not all the trades work out this well but the point in showing this one is that if you take small losses then catch a few of these, that is really all you need to do to move ahead nicely. I think the markets are quite choppy right now so I am exiting trades more quickly than normal. Once I perceive we are in more of a trending environment, I will look to hold things longer. For now there is no sense letting a nice profit like this get away. We do have another trade going right now that is lousy at the moment and a third that is a small gain. Such is the life of a trader.

PFG

There was a particularly offensive item in the court docket today for the PFG case, a suit against the former Mrs.Wasendorf. The suit against here is just and seemingly a slam dunk. She was paid almost $3 Million out of the customer account as part of a divorce settlement and refuses to give the money back. How could you possibly sit there knowing some people's lives have been wrecked and the money you have is part of that and was given to you illegally, and refuse to return it. She is disgusting and I hope the worst things possible happen to her. I don't blame her for the PFG collapse she likely had no idea, but I do blame her for refusing to return money she knows is client money. They have found a direct paper trail on the withdrawal, it is not even a matter of opinion.

I probably offend some people with comments like this but I could care less. I am still incredibly angry over this and it is a good thing for Wasendorf he is in the protection of a jail. As I build my accounts back up now I realize what a steep long road I have to make back what was stolen. I am making nice progress but the starting amount I have is so small compared to what I had. When I look at the authorities doing nothing to prevent another occurrence like this from happening I cannot tell you how angry it makes me.

I think it is inevitable now that we are heading to new all time highs so don't get too in live with shorting the ES. That time will come but it is not here yet.

Sorry about the spacing in the one paragraph sometimes Blogger does this where it just won't cooperate with the justification of some paragraphs. I will be glad to be rid of it once my new site is up ( probably another month they are going very slow ).

Good Trading

5 comments:

John M said...

"I probably offend some people with comments like this..."

Not me, buddy. You can see why that woman was married to him. Two peas in a pod.

Looking forward to the new site, thanks for the bond service and the blog, and give the dogs a pat on the head for me. (How are they, by the way? Hope everyone is good.)

Chris Johnston said...

Thanks for asking John, the crew is good and I am thankful every day for having them. Every day I spend with them I am so thankful that PFG did not take them all away because it very nearly did.

Anonymous said...

Chris,
Following the poor US consumer confidence number, check out this chart. Interesting divergence.

http://www.businessinsider.com/whats-wrong-with-this-picture-2013-1

- FXGuy

Chris Johnston said...

The reason why this does not matter is fundamentals are not what is driving the stock market, it is solely being driven by the FED. There are all sorts of divergences like this that would not normally be in place.

Anonymous said...

What I really noticed on the Gold chart was that 4 of the last 5 downturns - all very tradable on the short side - were classic Swing High patterns. Maybe it's time to pay attention to that pattern on that commodity.
Don in Virginia