Tuesday, May 27, 2008

Crude, FDG, TNH

I have been so incredibly wrong on the movements in Crude Oil that I thank my lucky stars I never put a position in place, nor made a recommendation thereof.

However, there are some fairly convincing signs that point to a potential top in crude oil prices, the most compelling is the clear 5 waves up structure it has formed since its bull market began around $10. Yeah remember $10 when gas at the pump actually dipped below $1 a gallon?

There certainly seems to be a vast consensus that Crude prices will do nothing but go up and up forever, but we know that this is pure fantasy and typically when ideas like this circulate it tells us that a certain commodity has run its course in price.

Bull markets come and Bull markets go and this is no exception.
There is NO Oil Crisis........ PERIOD!
When the markets finally come to grips with this fact, then look out below with crude prices.
The problem is that nobody knows when the speculators will finally realize this fact and until I get more technical confirmation, I will steer clear of shorting oil.

One other note is that when Crude does finally break lower, it is going to drag Coal Stocks and Ethanol stocks down with it, so be very cautious with these shares as well.

I am just about ready to hedge the FDG that was purchased at $25 and now sits close to $80. It has been a very nice ride and the stock even out did my estimations by $15 per share, however it is starting to show signs of weakness and as is always the case, all good things must come to an end.

The other stock we have participated in, but currently are outside looking in is TNH. This is yet another one to watch for lower prices once oil breaks. This stock has gone from $17 to $170! I would like to say I was along for that entire ride, but I cut out at $97. Certainly not a bad gain at all, but obviously short of the mark by $70 plus. This is also a stock that could get cut in half price wise and become a good buy, so we want to keep an eye on this one as well. If you are one of the fortunate few who held the stock all the way to its current lofty levels, you might want to consider selling half your position and placing a tight sell stop at $150 for the remaining shares.


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