Let's see - an asset that is in a long-term secular bull market after a 20 year bear cycle, no new supply for donkey's years, and it is *lower* than last year's highs. Then you have a classic "climbing a wall of worry" move, where it keeps looking due for a pullback, which somehow never seems to quite happen. Every $1-2 dollar pullback immediately reverses before any of the pikers can get in. Remember how at these prices in 2006, every man and his dog was a raging bull? Now at the same prices, everyone is calling a pullback or doesn't believe the move. Bullish fundamentals, a long-term bull market backdrop, momentum that keeps resuming the uptrend every time a pullback looks to be on the cards, a classic "wall of worry" sentiment, and yet the market just keeps inching higher. This is just like the S&P in 1995-97, or Gold from $320-500+ a couple of years back. If it looks like a bull market, smells like a bull market, and quacks like a bull market, then maybe, just maybe, it actually is a bull market. This is not rocket science. There are many ways to make big money in the markets, but I have to stick my neck out and say that calling small corrections in an entrenched bull market is not one of them. In September last year I said: "IMO oil will bottom a bit below $50. I may well be wrong. However, IF oil goes below $50, cleans out the longs, then stabilises, forms a base/bottom and recovers, then I'd say it's a pretty good odds trade that $45-50 is the next major low before the market goes up to $100 in the next 2-3 years." http://elitetrader.com/vb/showthread.php?s=&postid=1206673&highlight=oil+$50#post1206673 Nothing the market has done, gives me any reason to change my view. If anything it is just confirming it. My experience in the markets is that when you have a strong view, and the market then acts the way you expected, then if you are any good at all, you just have to pile in on size, because that is where you make the big money. For those who are bearish though, in the short-term there is one supporting factor, in that we are approaching the old highs. If the market reverses after testing or slightly penetrating the old highs, then you have a short-term bearish setup and may well get a nice pullback. Hence I am going to buy some puts to cover my longs if we reach say $77. But if that pullback occurs, IMO you really want to be buying that dip rather than expecting a big move down to say $60 or below. I would say $65-70 is probably the extent of any pullback from the old highs. That would be about 35-50% pullback of the rally up from $50. Anyway, no need to fret too much, because if oil is going to $95+ (which I expect), then you can just buy at new highs, scaling in as it moves higher, with a sensible stop and you will make money on the move.
Refineries not working well, driving gas prices higher and will keep them there. Troop pull out will cause a massive civil war in the entire mid. east region, oil will hit 100 by 2008. Energy prices will stay high for decades... period. E