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In October of 2009, light sweet crude oil hit a high of $82.43/barrel. At the close of trading on Thursday, October 14th, 2010, crude was priced at $82.69/barrel. Thus, as you can also see in the weekly chart below, crude oil has more or less been dead money for investors over the past year.
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The money trade has been to buy crude around $70, and below, and then take profits and initiate shorts at roughly $80, and above. Slam dunk, no? Of course, with the benefit of hindsight, we all could have gone all in on $DDRX in March of 2009 and rode the puppy up from $0.20/share to the mid-$30’s, where $GMCR and $PEET got into a bidding war over the firm, for good measure.
While the “obvious” crude trade outlined and illustrated above appears to be alive and well, a look at he daily chart could be giving us subtle hints that the range may soon break. In my view, the odds are starting to tilt in favor of the range resolving to the upside. This consolidation at the upper end of the range is by far the most orderly that we have seen thus far. When you combine that with the fact that this trading range has become increasingly ubiquitous, you have the ingredients for a not-so-obvious breakout that needs to be monitored closely.
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If the econ comes back, oil to $300
good call chess. i only trade /cl and i took profits at $83 but this is looking more and more like and upside break. my guess is we close down today and open up with a gap up on sunday into monday. target $87-90
CL took a real beating on friday evening…but if it holds 81-80 range in coming week, the momentum will start to change and a charge upto 84-86 v possible. It’s a natural extension with the further beating the USD is bound to take until the G20 meeting in Korea…On the flip side the threat of lower QE2 to make a “deal” with china could see mkts drop and CL back playing in the 68-84 dollar range.