World Oil Supply And Price Outlook, January 2021

Posted on by Robert Boslego

The Energy Information Administration released its Short-Term Energy Outlook for January, and it shows that OECD oil inventories likely bottomed in this cycle in June 2018 at 2.802 billion barrels. Stocks peaked at 3.210 billion in July 2020. In December 2020, it estimated stocks dropped by 40 million barrels to end at 3.061 billion, 172 million barrels higher than a year ago.

The EIA estimated global oil production at 93.45 million barrels per day (mmbd) for November, compared to global oil consumption of 95.59 mmbd. That implies an undersupply of 2.14 mmbd or 64 million barrels for the month. About 30 million barrels of the draw for November is attributable to non-OECD stocks.

For 2020, OECD inventories are now projected to build by net 127 million barrels to 3.006 billion. For 2021 it forecasts that stocks will draw by 95 million barrels to end the year at 2.910 billion.

Oil

The EIA forecast was made incorporates the OPEC+ decision to cut production and exports. According to OPEC’s press release on January 5, 2021: Continue reading "World Oil Supply And Price Outlook, January 2021" →

Why You Should Prepare For A Jump In Volatility

Posted on by The INO.com Team

By Elliott Wave International

Stock market volatility is like a roller-coaster ride -- extreme ups and downs.

However, unlike thrill-seeking roller-coaster riders who often rise from their seats after the ride with a smile, investors often exit with a frown.

That's because extreme volatility after a stock rally often ends with prices much lower.

Having said that, many investors -- even professionals -- do not anticipate a jump in volatility right now.

Indeed, the San Diego Union-Tribune asked the senior principal of a financial advisory firm on Jan. 15:

Will 2021 be a volatile year for the stock market?

He replied:

Continue reading "Why You Should Prepare For A Jump In Volatility" →

S&P 500, Dollar Index, Gold, And Silver Updates

Posted on by Aibek Burabayev

Before I start this update about the dollar, gold and silver, I would like to show you how accurate your prediction was for the S&P 500 back in October of 2020! At the time, I demonstrated to you the well-known Cup & Handle pattern in the making. That model was promising as the target was set at an ambitious $3891 level. Let us see it again below to refresh the memory.

S&P 500, Dollar Index, Gold, And Silver Updates

When I asked your opinion, whether this pattern is valid and will play out, most of you replied positively and supported my target. Let us see in the updated chart below how it played out.

S&P 500, Dollar Index, Gold, And Silver Updates

Your "crystal ball" worked perfectly as the new record maximum established last Thursday at $3860 had been just $31 below the target. The price action was not straight to the target as after the post, the price dropped quite deep, and the whole model was close to invalidation. Luckily, the further reversal built the "no look back" upside move. Continue reading "S&P 500, Dollar Index, Gold, And Silver Updates" →

Will The Futures Market Heat Up?

Posted on by Mike Seery

Natural Gas Futures

Natural gas futures in the March contract are currently trading at 2.44 after settling last Friday at 2.69 continuing its bearish momentum. Forecasts for warmer U.S. weather will curb heating demand for nat-gas continue to weigh on nat-gas prices.

On Thursday, the Weather Commodity Group said that the U.S. South and Midwest should see higher-than-normal temperatures predominantly over the next 2 weeks and that prior forecasts for a polar vortex in the Arctic to drop down into the U.S. later this month is not going to materialize. I'm not involved as I keep a close eye on a possible counter-trend trade. I think the spike bottom, which was created on December 28th around the 2.26 level, will hold as a possible Head Shoulders bottom pattern could be forming, in my opinion.

Natural gas prices are trading below their 20 and 100-day moving average as this trend remains lower to choppy. Still, I think this commodity will join the rest of the energy sector to the upside; it's just a matter of when the risk/reward will become more in your favor, especially if cheaper prices come about, so be patient and sit on the sidelines.

TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH

Copper Futures

Copper futures in the March contract is currently trading lower by 260 points at 3.6215 a pound after settling last Friday in New York at 3.6020, up about 200 points for the week still stuck in a tight 6-week consolidation pattern. Continue reading "Will The Futures Market Heat Up?" →

Options: "Rolling" Option Trades

Posted on by The INO.com Team

When engaging in options trading, it is only a matter of when, not if, a trade will move against you and challenge your strike. Despite being disciplined and following the 10 rules in options trading, trades will be challenged, and some losses are inevitable. However, some of these potential losing trades can be managed effectively to circumvent losses altogether via rolling. Given the right set of circumstances, trades can be rolled by closing out the pending trade for a debit and subsequently opening a new trade with a later date and further out-of-the-money strikes for an overall credit.

Options trading enables traders to define risk, leverage a minimal amount of capital, and maximize return on investment. Options trading can create smooth and consistent portfolio appreciation without predicting how the market will move. Options enable one to generate consistent and durable monthly income in a high probability manner in both bear and bull market scenarios.

An agile options-based portfolio is essential to navigate pockets of volatility and mitigate market downdrafts. The September correction, October nosedive, and election volatility into November are prime examples of why risk management is paramount. Over the past ~9 months (May-January), 190 trades were placed and closed. An options win rate of 97% was achieved with an average ROI per winning trade of 7.7% and an overall option premium capture of 82% (Figures 1 – 4). The performance of an options-based portfolio demonstrates the durability and resiliency of options trading to drive portfolio results with substantially less risk. Rolling option trades can be part of the overall options strategy to circumvent losses and mitigate risk.

Options
Figure 1 – Overall option metrics from May 2020 – January 18th, 2021
Continue reading "Options: "Rolling" Option Trades" →