Monday 23 May 2016

A Bullish Case for Crude Oil

Today's pullback in WTI is possible opportunity to go long WTI here at a favourable entry price in the range of 47-44, with a roughly 44 SL and a 50-52 TP.  Present market sentiment is bearish toward crude, which makes the effects of a market surprise to the upside above 50 dollars the perfect catalyst for crude to trade up to the 52 area, fueled by panic buying from traders that find themselves both caught short and wont to miss the then-evident potential upside. The market's bearish sentiment toward crude is apparently attributable to the widespread belief that The Fed will in fact choose to raise interest rates by 25 basis points at the next FOMC meeting on June 15, price trading along a flattening slope with a roughly 5% pull back, and bearish consensus among the analysts. However, the technical and to a lesser degree general conditions are arguably equally as bullish. Though the move in percentage terms since January appears to be a bit over-stretched, it has been supported by relatively strong, consistent volume and relatively weak volume on correction days. Add to that the current stagflation environment, the fact that potential inflation from QE 1-3 and TAARP has yet to fully work itself through the entire economy, and the effects that ZIRP has had on the propensity of consumer spending, one can reasonably expect some unexpected upward price pressure for commodities in general in the near/short term.


#CrudeOil at 47.72 via @investingcom - http://invst.ly/o7p