Saturday, January 7, 2012

DTO Stopped Out

The DTO (inverse oil) trade was stopped out at 37.67 this week.  There was a slight move to new highs, but without any convincing confirming data.  And there is bearish technical divergence on this new high as well.  So my plan here is to monitor this and make another trade attempt if there is a bearish technical signal in the days ahead.

Keep the big picture in mind on this.  The real money data from the commitment of traders data is very suggestive that oil is likely to decline BELOW its 2008 lows in the $30+ range.  That may seem silly, but we are coming off in recent months an all time high in the "supply" or selling capacity in oil futures, even higher than in 2008.  A huge portion of this is purely speculative holdings.  There is no physical use or need for the oil.  That speculative unwinding will assuredly accelerate price declines if the price begins to trend down.

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