I traded Brent crude for 15 years both in the trading pits and on screens. The high in 2008 was circa $145 with that adjusted for inflation that price in today's market would be circa $175. This is an area where you will start to get demand destruction. Wars are always hard to judge in terms of timelines. However, I think if or should I say when we see $175 that will be near the highs. Couple that with the increasing production of EVs plus a move by the west to become less dependent on Russian oil by importing Gas from the USA amongst other oil-producing countries. we will see WTI migrate back to its medium average price of $60 - $70. This will happen in a fairly quick time as the FED will help this if they continue to hike rates. Also bear in mind oil always overshoot expectations both to the upside and downside. So if the upper target is $170 it probably goes up to $180 -$190 and on the downside, it will fall to $50-$40 before finding its equilibrium at circa $65!! So I say all that to say this, $ average buying SCO from these levels down while WTI keeps rising is a great trade. You may have to hold them for a while and see a little pain in the interim but I feel like with the 2x inverse at some point it will yield great returns. It's what I call a bottom draw trade, meaning it possibly won't get into the green for a while. It would be prudent to what I call pyramid average $ buy. For example, buy 25 shares at $5 then 50 shares at $4.50 75 at $4, and so on.... Thay you build a decent position with a low average and obviously the lower it gets the more you can buy for less money. Here's the Risk as far as I'm concerned it's the Fund going under, that's it!!
TheCryptoChartWhisperer
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@benfowler1974, I use the Fibonacci sequence to invest. Thanks for your personal story. 20+% in the green so far. Cheers!
wrightway_capital
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i agree fully here with both of you, i can see oil back at 92 in a HURRY if there is a cease fire of any kind. might be a good posistion to keep on with some limited risk. reward could be very nice given that the 4 hour CL is looking tired.
jonesrj
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Be careful with SCO. Since March 7th WTI is down 15%, SCO is down 7.5%. Many of the oil derivative ETF/ETN instruments closed shop two years ago. Before the pandemic, OILU, OILD, and other leveraged and inverse OIL ETFs would track their intended target well. But now that doesn't seem to be the case with SCO. I have had better luck with USO puts. Just my $0.02.
HHSPN
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Which means betting oil will go down in price so the short shares will go up. Here's what I think might happen... given the geopolitical situation, the only leverage Russia has is oil and what will rest of the world do with Russia wrt purchasing oil. It's almost a given that China and its' likes, and the countries China controls or influences (in Africa and Asia) will keep buying from Russia. What rest of NATO countries does will decide the oil prices. If demand remains the same, the prices will go up given Russia's oil is taken out of circulation to NATO countries. Until this issue is resolved oil can trade above $100 a barrel and go higher too. The moment there is a solution for global supply, oil price will start receding. Like cease fire and/or buying oil due to humanitarian concern to support Russian residents hardships. Russia's economy will be in shambles soon if it's not already.
TheCryptoChartWhisperer
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@HHSPN, Thanks for your take on the situation. I never look at fundamentals only technicals so I'm just curious what other people think...Cheers!
HHSPN
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@TheCryptoChartWhisperer, I should've known you were looking for technical inputs being on TV. I am watching the charts not contributing yet. I do follow you as you have very interesting names and charts. You very rarely reply or take request for charts :-). Thanks for your time and sharing.
TheCryptoChartWhisperer
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@HHSPN, You are welcome. I was on vacation in Breckenridge, Co for a bit skiing and deep down I really love charting. I cut down my screen time from 14 hours to about a half hour for 15 days!
HHSPN
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@TheCryptoChartWhisperer, hope you had a good recharge. Charting is addicting. Few folks I follow seems like they are online all the time.