Those darn oil companies have done it again. They made another summertime holiday more expensive.
I warned you last week that the price of oil was sitting on support and looked poised to bounce. And since oil and gas prices increased going into the two previous summer holidays – Memorial Day and Independence Day – there was a good chance we’d see oil pop higher into Labor Day.
That’s exactly what happened. Take a look…
The price of oil has rallied about 8% over the past nine days. If you’ve filled up your gas tank lately, you probably noticed the move. It costs a lot more to fill up your SUV today than it did two weeks ago.
But, if you bought oil last week, then hopefully you’ve made enough money on the trade to offset the added gas expense.
Now, it’s time to take your profit.
If you take another look at the above chart, you’ll notice that the price of oil pulled back sharply after the Memorial Day holiday. It pulled back sharply after Independence Day as well.
So, if the trend continues, the price of oil is likely to pull back after Labor Day.
You’ll also notice that the various technical indicators at the bottom of the chart have moved from oversold conditions to either overbought or neutral conditions. That’s going to limit the potential upside from here.
Oil hasn’t quite made it up to my target price of $72 per barrel. But it has seen one heck of an upside move over the past week.
Traders who bought oil last week ought to take their profits off of the table before the weekend.
Best regards and good trading,
Jeff Clark
Reader Mailbag
Today, a clever take on the dance in Florence, and how it’s not so different from Jeff’s usual market insights…
After reading your recent emails that had a decidedly non-market basis, it occurred to me that they exhibit the same skillset you use in trading.
You see an opportunity to accomplish something, figure out the right price, and experience the benefits. With the dance in Florence, you saw the opportunity and contained the risk. And then stepped back and watched it play out beautifully.
As with the many successful investments you have suggested, it all started out with a willingness to look at an ordinary situation in an extraordinary way. You also structured the deal in a way to maximize the number of people who walked away with a benefit. A very cool, thoughtful approach that happens to pay off both in the markets and in life.
– Paul
What “non-market” habits have you picked up from trading? Or vice versa?
As always, keep it coming – along with any questions or suggestions – right here.
In Case You Missed It…
Months after taking office, President Reagan unveiled an ambitious plan to remake America’s money…
The plan would have taken control away from the Federal Reserve, and put money squarely in the control of the people.
The plan never came into effect. And these “Reagan dollars” were forgotten.