I know what I'm talking about... Here is the model for a sell off in oil below 110, into euphoria.
Oil and the dollar.... As brian Says, Failed move Bring Fast moves. Oil failed at moving to a higher high at 120, and is breaking down.... It has to find support, It last found support at the 110-112 level.
When we closed it had found support at the 50% replacement of the 110-120 range at 115....
We can expect a move to 110,
then the shorts will pull their positions, and we will retrace.... Imagine half the 115-110 range, 112.50.....
7am Dollar tests 1.467. Oil moves to say 112 in electronic trading.
9am nymex opens, it sells off immediately to 110.
Market Rallies on the open.
About 11 the market has flattened out, and started a correction...
Oil has bounced back to 112.50 in a retrace.....
As the Afternoon progresses, oil sells off and hits 110 bounces 111 On the Close,
market rallies slightly... or solidly on the close.
Tuesday Morning.
7am Electronic trading is in the 109,
9.am, oil bounces to the 110 level, finds resistance.
Dollar goes through 146.50
Falling through support in anticipation of the Wed Inventory report... Selling is frantic... Oil closes 108... Market Gets euphoric....
Wed morning, Oil is at 105-107... Morning Manic hits the market Crazy Morning Rally.... Tuesday noon... everyone Bearish on energy is short, everyone Long the market is In.....
"Inflection Point".....
Or some slower series of these events...... ending Wed or Thursday... Wed is energy report day...10 am that day would be a good day for it Too.
Also possible that in anticipation of a Bearish Inventory... This happens in anticipation on Tuesday, as I've prescribed...... And still maybe that inventory report will be the Catalyst for all Energy bears to be short, and all market participants to be long.....
Then.... REVERSION TO THE MEAN
Sunday, August 24, 2008
Lets Pretend
Subscribe to:
Post Comments (Atom)
3 comments:
The real indication is what a particular market does in response to some news. If NFP is horrendous and the market doesn't blink, then that is even more telling than a positive response to a positive news item.
If oil inventories drop unexpectedly but oil futures hold steady and don't bump up, well that would be very bearish indeed.
You can take each one of the news items due this week and give a projection of what the market will do with good, bad or in-line news.
Existing home sales. If these are better than expected, then a 150 point DJIA rally would expected and anything less would be a cause for worry. Etc...
Or you can just ignore all that noise and try to read the tape, which is what TK or Nicholas Taleb would argue for. Since I have to work all day tomorrow, I'll be taking TK's and Taleb's advice.
I'm long banks, some tech, and short KBR and HP and have a short sale order for BQI pending for am. I just sold TGT Friday. I'll probably glance at the market at about 11:30am and either shriek in joy or despair. Ahhhh.... the life of a day laborer.
Off topic: Eric, have you ever made a youtube video?
http://tinyurl.com/6jom25
LOL, that was funny.... It's the White T-shirt that sells it.... It was an eric worthy ramble....
I keep thinking, My blog would be better if I was a Literature Professor.....
Of course then it would be all about Sexual metaphors of Norman Mailer.
How about this... If all the news that is in the market, and it anticipates a future happening...
What it's predicting, by the Chart Astrology... The big Event Euphoric Event.. is probably a Break in oil.
Post a Comment