Sunday, March 08, 2009

Crude Oil Update

As many of you know, I am bullish on crude oil and believe that this market has bottomed. As I stated in the past it's very risky and dangerous trying to pick tops and bottoms but when I see an overwhelming amount of indicators suggesting that we may see a rally, I have no problem making a trade providing my risk is low and the reward is high.

In the above daily chart of crude oil and gasoline, you'll notice that on the last move down 2 weeks ago, gasoline did not break low with crude oil. This is a bullish divergence and in my opinion bullish for the oil market.

If you would like to read some of my other reasons for being bullish on this market, you can read my post from February 27th by clicking here.


Anonymous said...

When I look XLE, it appears to be beginning another leg down after a 4 month consolidation period. How do you rationalize a bullish stance on USO in light of that bearish trend in oil stocks.

Elaine said...


Do you have a target price for oil? Also, are you buying oil or oil stocks?


Kevin said...

Hi Elaine,

My target is more of a time target rather than a price target. I think oil will rally into late May.
I am long USO not oil stocks.

Hi Anonymous,

I see what you mean regarding XLE looking as though it's ready for another leg down but I think it will be short lived.

Anonymous said...

You are bullish on oil which at best is a dead cat bounce candidate It may have had its dead cat bounce already, after all it has rallied 30% from its bottom and it approaches resistance at its 50sdma. Not only that but you ignore the non confirmation from the oil stocks.

But somehow when it comes to gold which is the only asset class still in a bull market you are bearish and cautious and without hesitation you point the non confirmation of the gold miners.



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