Crude Futures Show Real Correction
Matthew Bradbard | Sep 19, 2012 04:51PM ET
In the last three days, crude-oil futures lost $8/barrel and are on the verge of trading under their 100-day MA for the first time in five weeks. As much as I hate to say it -- I’ve been forecasting a break to $90 for weeks, now and it looks like the market's about to deliver -- here goes: I told you so. Under the 100-day MA I see the next significant support just under $91 in November.
Focus On The Charts
Based on a lack of outside market influence -- dollar strength or weakness in the equity markets -- crude may be moving for reasons specific to crude. Whether it's a slowdown in China, tensions easing in the Middle East, a fear premium partially alleviated or whispers of an SPR release, I can't say for sure. Because I trade predominately off the charts, fundamentals are not a large concern in this particular move. What I do know is that after a 25% appreciation, this is the first real correction we’ve seen in months.
Operating under the influence, an interim top has been established as a 50% Fibonacci retracement in November puts prices at $89.25…my target. My favored play is short futures while simultaneously selling out of the money puts 1:1.
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