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Trill-Ride Thursday – Here We Go Again!

Posted on the 17 November 2011 by Phil's Stock World @philstockworld

To paraphrase Lloyd Bridges in "Airplane" – looks like I picked the wrong week to short oil.  We attempted to short oil at $100 and that did not work.  Then we attempted to short it at $102 and that did not work but $103 finally worked like a charm this morning as Oil Futures (/CL) plunged back to $100 between 4am and 7:30.

The trick with playing the futures is to play them like a series of momentum trades with tight stops (see our Strategy Section) above a certain resistance point.  As long as you manage your losses, you can simply re-enter at the next resistance and try again.  For example, if you picked the $100 line yesterday to short with a stop at $100.10, loss of $100.  Then the $102 line seemed like it would work but another $100 lost but $103 (we play the crosses back under, of course) became a huge winner, without a serious pullback until the bounce off $100.   

So far, the $100 line held up (only because the Dollar was slapped back down from 78.65 to 78.35) but there are still 86M barrels of oil open on the NYMEX and scheduled for December delivery.  That’s right, as I predicted yesterday, 60M barrels worth of oil contracts scheduled for December delivery were cancelled yesterday in a blatant attempt to create an artificial supply shortage for oil in the US.  

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