Monday, June 13, 2011

Perhaps a fatal flaw - June 13, 2011

Entered CL_Q1 at 99.8 Friday June 9th

After May's drop off Crude has been range bound. To me this was through rising price support. I figured that after the first week of June if prices held above support we would get a big jump on the following week open considering the aggressive risk off on June 9th Friday. 

Unfortunately it seems that risk off trend hasn't completely worn off. Equities are quite key in this environment. The SPX cash has fallen about 7-8% from 1370 peak and dollar has been rising with the sell off. Crude has been range bound between supply/demand contentions with Opec countries. 

Sunday into Monday trading, June 13, Crude dropped over a dollar in over night trading and is floating in the 99 range into US hours. My reasoning of support holding seems less reasonable as the price action is anemic. Though, possibly volume is less due to Europe markets are closed. 

On the UK session the dollar was weak $DX fell from just below 75 to mid 74.5 with $ES_U1 having a decent recovery. Going into 12:00 it seems uncertainty  and risk off is coming back into play as the dollar is fluctuating and the Majors/USD are slightly pulling back. 

Fundamentally if crude oil markets are to be tight price direction would be naturally up, but OPEC indecision is making prices ranged. Prices will take if the Saudi's do increase production by 1.5 million barrels per day, and if markets ignore decrease in spare capacity. If this is the case 98.00 will be broken and I will be out a lot of money. 

I'm hoping that there will be a squeeze on dollar weakness before the end of Wednesday trading back up to the upper BB's, which would also require a break in 76.4% fib which is acting as a short term resistance.

Currently looking for continued dollar weakness, US equities to have some relief from the past few weeks of aggressive selling and crude to get squeezed at least up to 100 - 101 range.  

Analyze Capital LLC

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