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Oil And Trump Both Need To Pause And Catch Their Breath

Adam Feik - INO.com Contributor - Energies

Oil has come a long ways, in really short order, rising from $26.21 on February 11 to over $38 as of March 31 (a 46% increase).

Hedge funds have become “as bullish on crude as they’ve ever been, according to the latest CFTC data,” said CNBC’s Melissa Lee on Wednesday.

Is the bullishness justified? Let’s try to sort all this out.

To start, here’s video of a Lee’s and Timothy Seymour’s CNBC interview of PR Advisors founder Robert Raymond. To me, Raymond’s analysis makes a lot of sense. See what you think. I’ve excerpted several statement from Mr. Raymond, followed by my comments (labeled Feik) to give you my view.

Raymond: “(The bullishness) is actually part of what has us concerned.”

Feik: I agree. John Templeton provided a favorite investing maxim of mine (and of many others) when he said, “Bull-markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” With so many people trying to bottom-fish in oil and energy right now, I don’t see the kind of pessimism or skepticism that sparks bull markets. So, like Mr. Raymond, that has me concerned. [Read more...]

Copper Update: Follow The Crude?

Aibek Burabayev - INO.com Contributor - Metals

Old trading wisdom says, "The Trend is your friend." I hope that you also prefer trending markets as it is the clearest action of market unity. I was patiently waiting for the upside move in oil to exhaust itself and see a clear break of the trend with a daily close and the following open to be below that close. And it happened today. So let's think about the coming opportunities.

Chart 1: Copper-Crude Oil Correlation: Gap Closed

Chart of the Copper-Crude Oil Correlation
Chart courtesy of tradingview.com

Oil finally managed to close the gap with the copper thanks to a very sharp trend amid a flat move in copper. Although copper peaked earlier than oil, the former started down first, as usual. They began to diverge again as oil fell below the blue support line while copper bounced up from its Thursday low. We will see if oil is still an early indicator of the copper move and if will they both hit new bottoms.

I refreshed the daily charts below to show you the recent moves in detail. [Read more...]

Copper Update: Flying High!

Aibek Burabayev - INO.com Contributor - Metals

We have experienced an interesting time recently; almost every commodity is volatile and that provides excellent trading opportunities. Last month I refreshed the copper chart to show the miscorrelation of the two assets and, this time, we can see positive changes in the correlation.

Chart 1. Copper-Crude Oil Correlation: Distant But Synced

Daily Chart of the Copper-Crude Oil Correlation
Chart courtesy of tradingview.com

As you can see in the chart above, both commodities reversed to the upside on the 11th of February (highlighted with the blue dashed vertical line). Copper managed to shape a higher low and crude oil hit the previous low level, making a new multi-year low, I doubt that we have seen the bottom yet.

Oil won back some disparity, but the gap is still broad and the overall move is flimsy with many zigzags on the graph line. Usually, “black gold” catches up with copper in a few large throws. Copper was less lucky and advanced only 6% compared to the 11% gain of crude. [Read more...]

Copper Update: Bottomed?

Aibek Burabayev - INO.com Contributor - Metals

If you have read my last update on this metal, you should be aware of a recent miscorrelation between the two core assets. You will see in the chart below that my bold expectations for a rapid recovery of oil didn't come true.

Chart 1 Copper-Oil Comparative Illustration: Investors Choose Metal Over Oil

Comparative Chart of Copper and Oil
Chart courtesy of tradingview.com

Neither the first interim low in the middle of December nor the second low in the middle of January could make the much anticipated V-shape rocket reversal. The main reason for that is the oversupply of the oil market. There are rumors that OPEC will soon reach a deal with Russia to cut production for their mutual benefit. This, of course, will cause the price of oil to rise. I think this is a temporary measure and after the short-term rise we will see the price of oil drop again, but it could take some time happen. [Read more...]

Applying More Logic To Oil Prices

Adam Feik - INO.com Contributor - Energies

I wrote last week about applying some logic to the oil crash, which as of January 20th had taken prices below $27.

It seems like ever since the very day I wrote the article (January 20th), a lot more "logic" has seeped into energy markets, as oil has quickly rebounded to around $34 (I'm sure my article had something to do with that; ha ha).

Could things possibly be stabilizing somewhat?

I know oil prices can always be volatile, but surely the crash that's taken prices from $107 to $27 can't continue forever. So what's next? [Read more...]

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