Futures Market - Energy Highlight #1
Crude oil, heating oil, and unleaded gasoline experience their sharpest rallies in 4 months just days after "Inversion Indexes" produce buy signals.
(COMMENT #s 27, 28, 29 and 48)
UPDATED 19980115
COMMENT 1998-27
1. CLH is the most liquid contract in this market.
2. Entry was suggested in COMMENT 1998-18.
3. Entry occurred 980112 at 1680 and was stopped out today at 1654 for a $260 gross loss per contract.
4. This market is still favored from the long side.
5. Traders should be particularly sensitive to market reversals to the upside in this market and should employ approaches that provide long entry with tight stops against recent lows in the March contract.
6. The very short term trading system presented on pages 96-101 of "The $upertrader's Almanac - Reference Manual" is such a "system".
7. A close above the open over the next few days will cause a "black" candlestick which should be sufficient to provide a short term entry signal.
8. The system presented in pages 205-209 of "The $upertrader's Almanac - Reference Manual" is particularly suitable for this market at this time as is the "ALMANAC II" trading system presented in "The 1996 $upertrader's Almanac - 2nd Half Edition).
9. The reader should observe that trading is simply the process of identifying a number of situations such as this one that have a chance of working out quite well if the analysis is correct but which involve very little risk to capital if wrong.
10. Can you turn to pages 365 and 253 and observe the timeliness of the weekly "Inversion Cycle" shown in this market?
11. Note how we have just this week barely broken, in the spot February contract, the late 1994 spot contract low at 1642 and the 1995 low at 1660. Remember the gold discussion regarding these false breakouts (see COMMENT 1998-9, #5).
12. This note is added 980116 - #s 5 & 7 of this comment have been changed and were previously backward.
UPDATED 19980115
COMMENT 1998-28
1. The most liquid contract in HO is February.
2. HOG was entered 980112 at 4660 in accordance with COMMENT 1998-18 and is still long.
UPDATED 19980116
COMMENT 1998-29
1. Note the weekly "Inversion Cycle Index" on pages 253 and 373.
2. Is this "Inversion Index" signal for this week?
3. Note that the 1995 lows of the last 3 years are 169 points below Thursday's close.
4. After studying the preceding COMMENTS, can you now figure out what you should be prepared to do in this market and how to go about doing it?
5. Isn't this easy?
6. Just turn the pages of the books and pay attention!
7. The word "contracts" was changed to "COMMENTS" 980116.
UPDATED 19980128
COMMENT 1998-48
1. Crude oil, heating oil, and gasoline have also turned sharply upwards.
2. These markets were reviewed in COMMENT #s 18, 27, 28, and 29.
3. Gasoline came within 25 ticks of the 1995 lows reviewed in COMMENT # 29.
4. Note how the "Inversion Cycle Indexes", as usual, have NAILED the turn to date in these markets (see page 253 of "The $upertrader's Book of Linear Time Cycles).
5. All three markets have now closed above the down trendlines of the last two months or so.
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