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RallyCry (< 20)

1 Big Day Does Not Break the Trend

Recs

3

July 01, 2012 – Comments (7)

Over the past few weeks, I was considering if the dollar strength and slacking oil prices would help to prop up retail spending and GDP here in the U.S in the second half of 2012. However, with Merkel stepping up and supporting the notion of ECB bond buying in the south of Europe and oil surging 9.24%, I paused to wonder if my theory still has traction.

Taking a broader look, I am not interpreting one positive trading session and European rhetoric as a reason to back away from  the exisiting trends (dollar strength, oil weakness). This rally really sets up in my mind as a great opportunity to go short oil and equities for the intermediate term. I could see oil falling another 30% in the coming months as the Europeans print away. At some point however it feels like the U.S economy will get a boost from gas prices at or below $3.

7 Comments – Post Your Own

#1) On July 01, 2012 at 12:56 AM, awallejr (81.44) wrote:

People seem to be ignoring the start of the EU Iran oil embargo.  That is why oil spiked hard I submit and will continue to do so.

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#2) On July 01, 2012 at 12:56 AM, awallejr (81.44) wrote:

People seem to be ignoring the start of the EU Iran oil embargo.  That is why oil spiked hard I submit and will continue to do so.

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#3) On July 04, 2012 at 1:10 AM, awallejr (81.44) wrote:

Sure hope people didn't follow your advice and short oil.  Until there is clarity on the "Iran question" shorts should look elsewhere.

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#4) On July 06, 2012 at 1:43 PM, RallyCry (< 20) wrote:

awallejr, I think your missing the point I was trying to make. It's not about today (where oil is getting bid down) or last week (where oil was being bid up prior to your post). In my analysis, I'm looking at a 3-6 month time horizon and not one week by itself alone in a vacuum. In 3 months we can debate if oil around $80-$85 was a good short. I think if you see it move down another 15%, it can be considered an excellent short, as I'm calling for prices south of $70.

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#5) On July 06, 2012 at 5:52 PM, awallejr (81.44) wrote:

That is the time frame I am looking at too.  The whole "Iran question" can pop up at any time which could crush any short play.  I just think it prudent to choose another play.

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#6) On July 07, 2012 at 12:43 AM, RallyCry (< 20) wrote:

I would equate that logic to buying a company because you think they may be acquired. There are too many headwinds in the face of oil: global slowdown focused in Europe, euro weakness, dollar strength, no more QE bullets to fire...Iran knows better than to attack their neighbors. They may be teritorial but they are not suicidal. Sanctions have been known to work from time to time.

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#7) On July 07, 2012 at 2:08 AM, awallejr (81.44) wrote:

You are assuming their mindset. So be it, feel free to play your hunch.  I just think others should go elsewhere.  One person's opinion.

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