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Saturday, April 4, 2009

Trading Crude

Hmm so the bulls are still going sharp..we have had one of the major rallies that stil shows no sign of stopping..atleast till now.Among all the commmodities crude has shown the maximum movement and is a traders delight.So wats my take on crude.Well crude crossed the psychological barrier of $50/bbl and has sustained above this level.This is a very bullish sign.The 100 day ema STANDS AT $53/bbl and this provides a strong resistance.We tried to unsucessfully make the crossove and if the rally in equities subsides on Monday crude might well be below $50.So at this point I would be watching the external markets along with Euro for taking positional trades in crude.A major rally in equities would signal continuance of bullishness in markets.And once crude crosses $53.25 i am bullish on it with a profit taking level of atleast $2.On the macroecnomic sides the continuance of mixed data fails to provide any signal.US recession seems to be deepening but increase in UK housing rates provide mixed signals.With summers appoaching there would be decreasde in heating oil requirments and until we see strong macro economic data coming ,bears hold the hammer.The MAy-June crude spread is widening signalling lack of liquidity in the market still persists.I'll be watching gulf barge basis to see if there any freight reduction to go short in this spread.So crude like always is going to be volatile but still if markets open down on monday i would be short at current levels with stop loss of $0.50 ie above$53.25
Happy trading

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