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Mordecai Rosenberg has been interested in trading for six years and has been trading for the last five. He trades stocks, futures, bonds, options and currencies. Leaving University with an honours degree in Music, Mordecai decided to turn his creative abilities to investing and trading after... More
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  • Oil and the S&P 0 comments
    Apr 5, 2011 4:14 PM

    It's been a great ride over the past few months if you were like me long oil, but as with all party's sooner or later it's got to end.  I was early to feel the trade was getting crowded and got short a little too soon using May $100 puts at around $103.  But with oil hitting two year highs and the trouble in MENA becoming saturated in the news to a point were no-ones listening anymore and the fact that the much hyped Saudi contagion never materialized I have no problem re-entering the short side for the next month contract and sitting put.

    As the world starts waking up to inflation with central banks from China to Poland raising interest rates today it won't be too long before the rest of Europe, the Uk and US do the same.  There's also the notion that the Fed may end quantitative easing early to signal to the market that it's time to stand up and go it alone. And the thing is, that's exactly what the Market needs and wants to happen as it will raise confidence in the markets ability to stand on its own two feet.

    That then, if it were to happen would send commodities across the board lower and as oil has came a long way in the last three months it could see a very healthy correction quite soon.  The fact that MENA fears have so far not effected supply one iota and central banks like China's have been raising rates would also add to this and have longs charging for the exits. At the same time if this were to happen the S&P would probably do very well as producers costs would be reduced practically overnight and confidence in the rally would reignite with the fall in fuel prices!

    So I'm short Oil, I'm early and I'm losing a little money, but over the next few months I feel I just could catch a very nice fall to the early nineties at the least.

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