timwest
Long

Crude Oil -CLZ2014 -Daily -Gann Swing Still Short but....

NYMEX:CLZ2014   LIGHT CRUDE OIL FUTURES
622 27 9
It closed over the resistance line... if prices can close up here it will set up fireworks to the upside.

Notice all of the Purple Boxes I have labeled in the decline. Those are range expansion and volume expansion bars (with one that is only price expansion) to the downside. They represent strong selling and are great "setups" for entries on the short side.

Notice that the last purple box was violated. Now that last one wasn't a big one and the close of the day was above the mid-point, which shows that sellers completed early, but it is a sign that the sellers are no longer in control. The buyers haven't stepped up to the plate yet, but when or if they do and if they find they don't run into a wall of sell orders, the floodgates of a rally will open up. It may just take the beginning of a new month to get portfolio managers to bite and allocate to crude oil             down here. Most likely PM's don't want to show owning this on the month-end report when it has been such a big loss for the month.

So, my forecast goes along the following lines. Buy here and risk to the bottom of that last purple box. Look to buy over the previous day's highs for the first three days of November. Upside 1, 2, 3, 4 from entry. I hope you can split your entry over 4 prices/pieces.

Tim 9:16AM 10/30/2014 "Mischief Night" in America, before Halloween Friday 10/31/2014 816.2 last
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2use
2 years ago
Please use stronger colors - took me 2 minutes to find the gann swing lines.
+1 Reply
timwest PRO 2use
2 years ago
I don't want to see the vertical lines, just the bright purple line riding down on top of the price. I faded those vertical lines out on purpose - they are visually distracting to me. You can see the red carrots on top of the chart and the green carrots at the bottom.
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timwest PRO
2 years ago
Crude is dipping right into the support zone.... I'm watching.... closely....
snapshot
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timwest PRO timwest
2 years ago
The middle of that lowest purple box is 80.40 +/-. I could buy right here and stop out under 80.40, with upside to 85-86 for a risk/reward of .70/4.00-5.00 or almost 6:1 or more than 7:1. Not bad....
+1 Reply
ChrisMoody PRO timwest
2 years ago
Wait til you see the chart I'm about to PM you.
+1 Reply
IvanLabrie PRO timwest
2 years ago
'Not bad' -> like this is child's play, great stuff! :D
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elcololp timwest
2 years ago
TIM I need your help. Are you seeing descorrelation between ITUB and PBR today? See chart 5 min http://screencast.com/t/qJyuVWoQn Thanks!
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timwest PRO timwest
2 years ago
The risk/reward goes up exponentially as you approach the stop at 80.40.... with the low at 80.80, the stop is 0.40 away and the target was 4.20-5.20 or 10-13 times return on risk. That's a doubling of the ratio and a reason to step up to the plate here.
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elcololp timwest
2 years ago
another point of view http://theoptionsinsider.com/bloomberg-oil-stocks-lure-bearish-bets-since-2007/
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timwest PRO timwest
2 years ago
This is a great setup so far. 81.65 last +0.85 from the low... acting like it held that bottom "purple box" failed range expansion down to test the low. (Bullish)
+1 Reply
alexeyhoroshunvk timwest
2 years ago
I agree, from monday). Will see.
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timwest PRO
2 years ago
Longs stopped out. Under 80.40 a "no go", under $80.40 a "short"...
+1 Reply
timwest PRO
2 years ago
Crude is going for the Gold.... that is ... breaking support and heading lower....
+1 Reply
IvanLabrie PRO timwest
2 years ago
Amazing, stop and reverse huh? Very nice setup, either way.
+1 Reply
elcololp timwest
2 years ago
Tim, do you think there's not a good time to buy oil stocks?
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timwest PRO elcololp
2 years ago
I think this is a great time to get your shopping list together. I'm buying Royal Dutch with a 5%+ yield. I'm looking for the oil companies with the best financial condition to weather low oil prices. I imagine oil trading in the range of 75-85 for the next 6-12 months. So, with that in mind, you could sell puts against cash to buy oil stocks at these prices. Then, once you buy them (from being put them from exercise), then turn around and sell calls against them for 6-9 months.
+2 Reply
2use timwest
2 years ago
Nice strategy!
+1 Reply
timwest PRO 2use
2 years ago
15%-20% return a year strategy, including dividends. Very stable. Beta of 0.3 instead of Beta of 1.5 to earn that return.
+1 Reply
IvanLabrie PRO timwest
2 years ago
Amazing :D Taking notes for when I get a capital worth sniffing at.
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2use timwest
2 years ago
Hm, impressive! how do you know it's beta?
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timwest PRO 2use
2 years ago
It's my own internal calculator but in high dividend, stable capitalization companies, the volatility is less than the market. On top of that, writing puts lowers your volatility and then writing calls does too. So, it's a low beta strategy. Buying low beta stocks and writing calls on them is a very low beta strategy.
+3 Reply
2use timwest
2 years ago
Im writing this down for future reference :)
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elcololp 2use
2 years ago
Bulls return to Big Oil in a big way


bullish activity in Exxon Mobil and Chevron as investors look for upside during the next seven weeks. XOM hit first, with more than 12,000 December 100 calls bought for $0.48. Minutes later, some 11,600 CVX December 125 calls were purchased for $0.52. Volume was more than twice the previous open interest in each strike.

These long calls lock in the price where investors can get long, ensuring they won't miss a rally. Their relatively cheap cost helps manage risk and can result in significant leverage on a percentage basis if shares move in the right direction
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timwest PRO elcololp
2 years ago
Those could also be hedges for new short positions about to be taken...
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timwest PRO
2 years ago
It did stop out the short and go long at the close on Friday...
snapshot
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alexeyhoroshunvk timwest
2 years ago
Tim, what target do you see?
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timwest PRO alexeyhoroshunvk
2 years ago
I will be monitoring step by step. Once we get over a previous day's high, the upside could be sharp and swift. You can see the momentum of the sellers (the highs of the purple boxes) is diminishing...
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