That's pretty much where I am too. I have no problem with shorting, probably do it too much, but I want to give it a couple of days to see where we settle after all this time being range bound. I'm also a little worried about Trump messing with the 60/40...the tax benefits make such a difference to the bottom line.
Can you please explain to me what the word "scary" means? I'm genuinely curious. Most people don't use that term with commodities since "lower" commodity prices usually is "good" for consumers. All of us are natural shorts in energy meaning we benefit when the price of gas goes down or jet fuel or diesel. Yet you use this term to mean something different. Can you explain to me what is "scary" about lower oil prices. Higher, that makes sense. Higher oil prices can be scary and much higher prices can be devastating. Yet you are "scared" if oil breaks 50. I'm lost on this logic.
Republicans are all about big tax breaks for the top income brackets. Put in a stellar year and you get to keep more of it, that is if you already have health insurance provided by a job or from your spouse or parents.
I brought up the 60/40 issue a few posts ago. I'd be curious to know your thoughts on that specifically, and I thank you for your contributions (and everyone else's) to the thread. It has been a great read.
I read this elsewhere (granted it is from 2014): "Note that 60/40 treatment has been attacked for a few years now. Would not be shocking to see it scrapped in an eventual tax deal, somewhere down the line. Unlike carried interest, which has a solid theoretical basis, the 60-40 basis is somewhat arbitrary. The Green Book is how administrations float their wish list for taxes, and 60/40 has been a prior Green Book victim."
I meant the term "scary" in the potential swings we could now be facing in oil. It is scary for swing traders like myself. Normalized swing ranges are groovy. You know, $4-$5 over a mid-term of 4-6 months. But $15? $20? The risk exposure gets "scary". And most people don't use the term "scary" with commodities, because most people are not commodity traders. I could care less about the consumer in my trading, even though I consume what I trade. I'm a trader first, consumer second. You dig? Heh.
in terms of technicals, crude looks to have just broken its 50, 100, and 200 MA. coupled with the fact that so many hedge funds are positioned long, stop losses may likely be triggered in cascades. then you also factor in the possibility of CTAs becoming positioned short, as the breakout to the downside develops, given the accelerating momo dynamics. once $50 breaks for WTI, may be a quick downdraft to 45, then it's all empty air from there...caveat is that from a game theory perspective, if any 'entity' was supporting the market within the range from Dec to Feb, they may be doing so out of non-economic reasons
I don't think so. The forward curve is still tight and barely budged on this selloff. I agree the COT report is insanely bullish. I track this weekly and we topped out at 91% (highest reading ever). Last week we dropped back to 80%. I feel this needs to get back under 70% which it will in the next few weeks. Here are a couple of things of note. It's maintenance season right now for refiners. Since they are the marginal buyer of crude, this is seasonally the weakest time of year when they go offline till April. This is very normal. I do think some weak longs need to get taken out but their size relative to the market is tiny. The forward curves show the market is re-balanced despite the inventories that have come smashing into the gulf the last few months. Most people (myself included) believe oil will breakout sometime in late april and early may when summer gasoline season is in full swing. For now, option vol is still as cheap as it's ever been and anyone who is "scared" can hedge for next to nothing. I think we will stay in this tight range but that 50 level is easy picking to lure weak shorts into the market and squeeze out week longs. I say the market will trade then 48 to 55 until May then make a push towards 60 into June and July. I'm looking to be a buyer on the forward curve if it drops a little more.
You have an interesting insight on this. Your call for pushing to 60 into June and July is interesting. We won't have to wait long to see how it pans out for those delivery months. Exciting times, but still scary to someone like me, a lowly retail dude with a modicum of capital. Caution is warranted for me.