Bachelors degree in Finance, Journalism, and Masters degree in Economics. Member of National Economics Honor Society Small business owner over 25 years. Trading energy futures and options since 2002. e2800 http://seekingalpha.com http://seekingalpha.com/instablog/180424-e2800/45031-crude-action?source=feed 45031 I'm sorry, but I'm tired of the rational behind the price movements. Chinese tightening?, are you kidding me? Now traders side with the API numbers, even though the EIA says an inventory draw down? Why can't we just see one writer say what it is.
The contract was overpriced at $84.00 and the bulls have run out of gas. There are fewer buyers at this level and the price action is indicating that. It's not Chinese this and dollar that. The whole commodities complex is being sold off because it was overbought in the first place. As is the stock market.]]> Fri, 22 Jan 2010 10:37:37 -0500 I'm sorry, but I'm tired of the rational behind the price movements. Chinese tightening?, are you kidding me? Now traders side with the API numbers, even though the EIA says an inventory draw down? Why can't we just see one writer say what it is.
The contract was overpriced at $84.00 and the bulls have run out of gas. There are fewer buyers at this level and the price action is indicating that. It's not Chinese this and dollar that. The whole commodities complex is being sold off because it was overbought in the first place. As is the stock market.]]> http://seekingalpha.com/instablog/180424-e2800/42997-crude-trade?source=feed 42997 Now we have the same set up.  The entry should be either long at $83.52, just above the high on 1/6/10, or short at $80.85 which is the low from 1/6/10. 
The double top makes a compelling case for the short side, but the government intervention is really playing with the market and what has worked in the past, may not now.
We'll see.




Disclosure: Long @CL0H]]> Sun, 10 Jan 2010 20:40:16 -0500 Now we have the same set up.  The entry should be either long at $83.52, just above the high on 1/6/10, or short at $80.85 which is the low from 1/6/10. 
The double top makes a compelling case for the short side, but the government intervention is really playing with the market and what has worked in the past, may not now.
We'll see.




Disclosure: Long @CL0H]]> http://seekingalpha.com/instablog/180424-e2800/42432-commodity-markets-return-to-irrational-behavior?source=feed 42432 This is a headline that needs to be written. Led by the energies and precious metals the markets shot forward today with no regard for fundamentals. Crude oil seemed to be shot out of a cannon after selling off on a report which cited among other things; Refineries operating below 80% of capacity, crude oil imports averaging 1.5 million bpd less than the same period a year ago, and commercial crude inventories up 1.3 million barrels and above the upper limit of the average range for this time of year. All in all this is an extremely bearish report. 

The ADP employment report was also bearish, citing goods producing jobs off by 96,000. This includes a 52,000 drop in construction, and 42,000 drop in manufacturing. 

The euro is up slightly as of time of this writing, hardly enough to warrant a .40 rise in silver and $20 rise in gold, A $1.00 increase in oil, or a .3700 increase in natural gas.  

So what is it that we are witnessing? As a trader I couldn’t help but notice that oil bulls were so aggressive that the electronic trade spiked 2 minutes before the EIA report was released. The bullish tone of the markets went unaffected by the bearish report, and after an initial sell off the contract had no trouble passing the days highs. The volume and price activity are both pointing to very irrational trading behavior. The electronic trading had an average 30 minute chart volume of more than 16,000 contracts every 30 minutes. On Dec 9^th, which was also an inventory report day the average 30 minute volume was less than 4000. As a percentage change the figures are even more disturbing for the electronic Natural gas contract. 

I use the word disturbing, because that is what it is for anyone who believes that prices should be determined by fundamentals, and that markets are a place where buyers and sellers of a particular good come together and determine a price based on need, and not greed.   

]]> Wed, 06 Jan 2010 13:56:38 -0500 This is a headline that needs to be written. Led by the energies and precious metals the markets shot forward today with no regard for fundamentals. Crude oil seemed to be shot out of a cannon after selling off on a report which cited among other things; Refineries operating below 80% of capacity, crude oil imports averaging 1.5 million bpd less than the same period a year ago, and commercial crude inventories up 1.3 million barrels and above the upper limit of the average range for this time of year. All in all this is an extremely bearish report. 

The ADP employment report was also bearish, citing goods producing jobs off by 96,000. This includes a 52,000 drop in construction, and 42,000 drop in manufacturing. 

The euro is up slightly as of time of this writing, hardly enough to warrant a .40 rise in silver and $20 rise in gold, A $1.00 increase in oil, or a .3700 increase in natural gas.  

So what is it that we are witnessing? As a trader I couldn’t help but notice that oil bulls were so aggressive that the electronic trade spiked 2 minutes before the EIA report was released. The bullish tone of the markets went unaffected by the bearish report, and after an initial sell off the contract had no trouble passing the days highs. The volume and price activity are both pointing to very irrational trading behavior. The electronic trading had an average 30 minute chart volume of more than 16,000 contracts every 30 minutes. On Dec 9^th, which was also an inventory report day the average 30 minute volume was less than 4000. As a percentage change the figures are even more disturbing for the electronic Natural gas contract. 

I use the word disturbing, because that is what it is for anyone who believes that prices should be determined by fundamentals, and that markets are a place where buyers and sellers of a particular good come together and determine a price based on need, and not greed.   

]]> http://seekingalpha.com/instablog/180424-e2800/42430-commodity-markets-return-to-irrational-behavior?source=feed 42430 Commodity Markets Return to Irrational Behavior

This is a headline that needs to be written. Led by the energies and precious metals the markets shot forward today with no regard for fundamentals. Crude oil seemed to be shot out of a cannon after selling off on a report which cited among other things; Refineries operating below 80% of capacity, crude oil imports averaging 1.5 million bpd less than the same period a year ago, and commercial crude inventories up 1.3 million barrels and above the upper limit of the average range for this time of year. All in all this is an extremely bearish report. 

The ADP employment report was also bearish, citing goods producing jobs off by 96,000. This includes a 52,000 drop in construction, and 42,000 drop in manufacturing. 

The euro is up slightly as of time of this writing, hardly enough to warrant a .40 rise in silver and $20 rise in gold, A $1.00 increase in oil, or a .3700 increase in natural gas.  

So what is it that we are witnessing? As a trader I couldn’t help but notice that oil bulls were so aggressive that the electronic trade spiked 2 minutes before the EIA report was released. The bullish tone of the markets went unaffected by the bearish report, and after an initial sell off the contract had no trouble passing the days highs. The volume and price activity are both pointing to very irrational trading behavior. The electronic trading had an average 30 minute chart volume of more than 16,000 contracts every 30 minutes. On Dec 9^th, which was also an inventory report day the average 30 minute volume was less than 4000. As a percentage change the figures are even more disturbing for the electronic Natural gas contract. 

I use the word disturbing, because that is what it is for anyone who believes that prices should be determined by fundamentals, and that markets are a place where buyers and sellers of a particular good come together and determine a price based on need, and not greed.   

]]> Wed, 06 Jan 2010 13:54:45 -0500 Commodity Markets Return to Irrational Behavior

This is a headline that needs to be written. Led by the energies and precious metals the markets shot forward today with no regard for fundamentals. Crude oil seemed to be shot out of a cannon after selling off on a report which cited among other things; Refineries operating below 80% of capacity, crude oil imports averaging 1.5 million bpd less than the same period a year ago, and commercial crude inventories up 1.3 million barrels and above the upper limit of the average range for this time of year. All in all this is an extremely bearish report. 

The ADP employment report was also bearish, citing goods producing jobs off by 96,000. This includes a 52,000 drop in construction, and 42,000 drop in manufacturing. 

The euro is up slightly as of time of this writing, hardly enough to warrant a .40 rise in silver and $20 rise in gold, A $1.00 increase in oil, or a .3700 increase in natural gas.  

So what is it that we are witnessing? As a trader I couldn’t help but notice that oil bulls were so aggressive that the electronic trade spiked 2 minutes before the EIA report was released. The bullish tone of the markets went unaffected by the bearish report, and after an initial sell off the contract had no trouble passing the days highs. The volume and price activity are both pointing to very irrational trading behavior. The electronic trading had an average 30 minute chart volume of more than 16,000 contracts every 30 minutes. On Dec 9^th, which was also an inventory report day the average 30 minute volume was less than 4000. As a percentage change the figures are even more disturbing for the electronic Natural gas contract. 

I use the word disturbing, because that is what it is for anyone who believes that prices should be determined by fundamentals, and that markets are a place where buyers and sellers of a particular good come together and determine a price based on need, and not greed.   

]]> http://seekingalpha.com/instablog/180424-e2800/41912-energies?source=feed 41912 The daily chart shows nothing of consequence and so any entries will be short term and placed in reference to the 30 minute chart.  More as the week goes on.]]> Sun, 03 Jan 2010 12:39:14 -0500 The daily chart shows nothing of consequence and so any entries will be short term and placed in reference to the 30 minute chart.  More as the week goes on.]]> http://seekingalpha.com/instablog/180424-e2800/41034-crude-inventory-levels-indicate-lack-of-demand?source=feed 41034 Lets take a look at this in real world terms.  You have a store that sells barrels of crude oil, and you have a stock room full of these barrels.  Now your customers, who use your product as an input to produce a final product, are using 10%-20% less than they had been previously.  What would you do?  You would deplete the stock in your back room before you purchased more.  In addition you would scale back your future purchases in order to keep your inventory lower.  Translation - Less imports. 
It would be ridiculous if oil inventories were not falling. 
The analogy is simple yes, but lets stop pretending that the inventory report is anything more than an excuse for speculators.  If the report was taken seriously as a trading guide, wouldn't it take more than 2 or 3 seconds to peruse the report and make a serious decision on whether to buy or sell.  Oil goes up, and oil goes down (although not as much as I think it should) but we would all be better off with real analysis.]]> Wed, 23 Dec 2009 22:37:03 -0500 Lets take a look at this in real world terms.  You have a store that sells barrels of crude oil, and you have a stock room full of these barrels.  Now your customers, who use your product as an input to produce a final product, are using 10%-20% less than they had been previously.  What would you do?  You would deplete the stock in your back room before you purchased more.  In addition you would scale back your future purchases in order to keep your inventory lower.  Translation - Less imports. 
It would be ridiculous if oil inventories were not falling. 
The analogy is simple yes, but lets stop pretending that the inventory report is anything more than an excuse for speculators.  If the report was taken seriously as a trading guide, wouldn't it take more than 2 or 3 seconds to peruse the report and make a serious decision on whether to buy or sell.  Oil goes up, and oil goes down (although not as much as I think it should) but we would all be better off with real analysis.]]>