Wednesday, June 24, 2009

Oil Failing to Rally on Bullish News...A Foreboding Sign

Have you been piling into oil with the rest of the hot money? Might want to think about covering...or even reversing...your position.


The fact that oil didn't leap up with delight at riots in Iran should make oil investors quake with fear. Iran produces about 5% of the world's oil every day. Its populace is rioting... and yet the price of oil fell 3%.

As my colleague Brian Hunt pointed out, it's a big bearish sign when an asset cannot rally on bullish news. We could see oil prices go into decline any minute.

Since breaking the $70 mark, oil has looked a bit toppy. News that China has stockpiled more oil than it can handle appears to have given investors pause.

Oil may be running out of breath after a huge run-up. (Source: Barchart.com)

Now's probably a good time to take some profits...and if you like to live dangerously, maybe even consider taking a small short position for a short-term trade.

PS - If you're a fan of short-term trading, I'd suggest you check out Jeff Clark's S&A Short Report. It's pricey...but if you're a serious trader, it's really top notch insights and recommendations. And right now they are running a special 3-month trial deal.

2 comments:

michaeld said...

Very good article.

In my opinion, it is all a matter of market timing. It does not matter if it is gold, oil, or Microsoft, if you have access to good market timing signals, they will help you get in and out at a profit.

No guarantees in this business, but if they are right most of the time, you can still make $s.

There are may web sites providing them out there (search Google). Just find one that works and use it! Check out http://invetrics.com as an example.

Its Dow Jones timing signals are up 43% as of 6/23/09 while the Dow is up just 29% off its March lows.

Following a market timing system works!

Brett Owens said...

Thanks for the comment and resource!

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