timwest
Long

There's a time to reap, a time to sow

NYMEX:CL1!   Light Crude Oil Futures
2626 32 33
It's a time to sow seeds in the oil             market here with a long term view in mind. Short term the market looks terrible with no bottom in sight. Long term we are down to the bottom end of the range with only $30 until you get oil             for free.

The risk/reward is very interesting here since the last 2 years range is over $100 to the current $30. If the price of oil             falls to $20, it will be a big win for all of us too from lower transportation costs and lower heating costs. But it oil             turns and goes up from here it could be a big negative. It will make sense to lock in these low prices for as long as possible, perhaps the next 10 years.

What is the best way to achieve this "hedge"? That remains to be the item to discuss. It could be looking around for "oil in the ground" through the various companies that own vast reserves of oil             that can be pumped up when prices rise. You can research for yourself and find companies with reasonable debt levels, solid cash flow, low production costs and lower dividend payouts.

Either way, I like the odds here that oil             can go up $70-$100 in the next 5 years, but I don't see it going down more than $10 for a risk/reward ratio of 7:1 - 10:1. Those kind of upside/downside rewards are rarely offered in the markets.

On a SHORT TERM basis: Look at the various technical setups.
1. There is a lower volume drop on this recent push down, implying weaker sellers. (see Volume chart below)
2. Short term price oscillators are turning back up (See CCI xo -100). It's a measure of price relative to the 11-day average.
3. Longer term price oscillators are failing to keep downside momentum. See the bottom window where the 1 year rate of change has been making higher lows with each push down, which is a bullish "standard divergence".
4. My proprietary "RgMov" price trend indicator is showing that the new lows were not confirmed.

Keep in mind that this is a continuous contract and is NOT a real contract. To achieve this price return, you would have to roll from one contract to the next and it could either cost you a lot of money or it could hand you free money. Owning crude oil             above the ground is an expensive proposition.

Keep me appraised of your "BEST WAY" to own crude oil             . I'll do my best to reply or respond to your questions or comments.

BUY CRUDE OIL             31.01 LAST, 20 stop, 100 target - long term (1 year - 5 years)
BUY CRUDE OIL             31.01 LAST, 45 target, 20 stop - medium term (6-12 months)

Tim 1/14/2016 Thursday 11:42AM EST
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I will join you soon.
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I will join you soon.
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timwest PRO elliott-wave-analysis
I am not relying on Elliott Wave counts to justify the trade here. It might take a month or more for this trade to set up. It could also happen overnight with any embargoes, attacks, or detonations. I hope you can post when you take a trade using your line of thinking. I am a schooled expert in EW from the genius of Glenn Neely of NEoWave. http://www.neowave.com Feel free to check out his materials. Nothing is more in-depth then Glenn's book on EW.
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Love your analysis Tim, always amazing, but that SL would lose twice the margin cost on a straight futures contract unless I'm misreading.
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timwest PRO smitheric1970
Right - Only buy what you can afford to lose. If it drops $10 or so to $20, you'd be out $10/barrel or $5000 using the QM mini-contract or you'd be out $10,000 on a full size CL contract. If that risk was 2% of your portfolio, you'd need to have a portfolio of $250,000 for QM or $500,000 for CL. I was suggesting to buy the oil stocks too, since the oil is in the ground.
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Ok thanks for clarifying, much appreciated!
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Better you to stay off ..))
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this is not a trading strategy !
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Keep in mind that if the Saudi government fails we will have instantaneous jump in Oil. I am a buyer of oil also with a long term view.
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What vehicles are you using for this investment strategy?
I'm looking at XOM mainly...PBF, TSLA...you?
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mazdaki PRO IvanLabrie
USO... Staying away from TSLA as it is in the downtrend in hype cycle. Also buyer of VLKAY as oppose to TSLA.
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timwest PRO IvanLabrie
I'm thinking that there are some oil juniors out there with low costs and low debt that could have plenty of reserves in the ground. I think the XOM's and CVX's are the first place to go. PBF is just a refiner and not really a play for a bottom in crude. TSLA is an interesting play and would get very interesting if there were a supply disruption for oil.
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AlphaxRx timwest
Midstream producers aka MLP are vulnerable to dividend cuts and credit rating downgrades. Although I think it is safe to say they are my go-to O&G on very long term basis. They are indispensable in the O&G landscape with high entry cost barrier. Even though they may not be as cheap as the juniors, I like to hold it on a long term horizon. As for strictly upstream producers, you gotta cherry-pick the juniors to mid producers, since 50% would go bankrupt if oil stay below $50 - $60 for two more years.
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timwest PRO AlphaxRx
I'd like to know more about your comment about 50% going bankrupt in the next two years. Which names do you like the most? Least?
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Peninha timwest
In looking also into XOM and CVX, but COP (ConocoPhilips)
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According to my count this could be very intresting. Right here!
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bracken bracken
same chart...big picture
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bracken bracken
In very high resolution (1 min bars)
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Price needs to move above the white line at $29.60 to activate set-up

Happy trading!
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bracken bracken
update:

It seems to me we are having an expanding triangle triangle as the possible pattern. They usualy break down but I'm not so sure in this case.
Why? Because 1/ the inflection-point and 2/one triple-top break-out and another one possibly in progress
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Yes, think it's time for the bottom, oil likes to bottom out in mid january altough it may retest bottom in mid february or march. At least that's what happened in 2009 2007 and other instances
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lucianfx00 lucianfx00
Probably 45$ by may-jul or maybe higher.
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I certainly agree. I am looking at some oil companies, who did some crazy acquisition in the later part of the year. Some Major companies have sold, while smaller ones buying them. Will share a few of my stock picks when I am back from travelling.
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Perhaps even better do not use a stop for this long term positions. At the same time calculate the size of position of the possible levels of 20 and 12.
Profits will only depend on time)
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lucianfx00 Vladimir2016
Low leverage with no stop probably the best way to trade this, the only thing that bothers me is the swap wich is verry high. I would instead like to short USDCAD for 1.34-1.30 (has positive swap for shorts, ) but there is less gain there if oil bounces and also if it goes to 25 or lower this USDCAD can verry verry fast reach 1.6 or higher
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Vladimir2016 lucianfx00
It certainly makes sense, but I suppose the potential profit growth for the position(oil) will be much more than the losses on the swap or rollover. The correlation of USD / CAD with oil is only 0.6-0.8.
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Tim I totally agree with your view.....it just might dip below $20 before the turn. First the 26.00-23.80 , but lower "Magnet Targets" might come as we know markets go lower or higher than anyone expects.
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SynergyCharts SynergyCharts
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