Oil up 38% in 7 days! When to sell?
Oil exploding higher again making a 7 day run of 38% and XLE running up 14%. Long-term XLE is my play, raking in the dividends but taking profits relatively soon might be wise. We are right at the resistance level for XLE that looks to be pretty heavy but that resistance isn't like the Ukrainian military so I think it's more likely we blow through that level if oil continues. it cannot continue at this pace for long and that's why I want to be taking profits.
If you're trading in the futures market then you have a much better chance of pulling in some high percentage gains in the short run as I believe somewhere above $150/ barrel you will find resistance and it will come crashing down. The question really is, where is the new support? As long as this war continues I think we will stay above $78/ barrel as the new support level. especially with inflation. If WW3 cracks off, all bets are off and I wouldn't see it falling below $100. That being said, XLE won't experience the same type of gains in the short run as a trade. As soon as oil sells off people will sell XLE hard because they are really betting on future gains of the sales of gasoline which won't be there if oil has come back down. The catch is if oil continues to stay elevated and without any subsidies from the government, then there will be less driving which means fewer sales and XLE will be falling.
This is why I think it's wise to take profits on the way up, find a huge sell-off and get back in position on the way down. As we are likely heading into a recession I may roll some of this into TLT for the short run as I exit don't he way up to potentially make some gains in TLT without taking the risk in XLE. As XLE falls when oil pops the lit off, that's when I take my gains in TLT and roll it into XLE again for a longer trade but increasing my position by 20-30%,
If you're trading in the futures market then you have a much better chance of pulling in some high percentage gains in the short run as I believe somewhere above $150/ barrel you will find resistance and it will come crashing down. The question really is, where is the new support? As long as this war continues I think we will stay above $78/ barrel as the new support level. especially with inflation. If WW3 cracks off, all bets are off and I wouldn't see it falling below $100. That being said, XLE won't experience the same type of gains in the short run as a trade. As soon as oil sells off people will sell XLE hard because they are really betting on future gains of the sales of gasoline which won't be there if oil has come back down. The catch is if oil continues to stay elevated and without any subsidies from the government, then there will be less driving which means fewer sales and XLE will be falling.
This is why I think it's wise to take profits on the way up, find a huge sell-off and get back in position on the way down. As we are likely heading into a recession I may roll some of this into TLT for the short run as I exit don't he way up to potentially make some gains in TLT without taking the risk in XLE. As XLE falls when oil pops the lit off, that's when I take my gains in TLT and roll it into XLE again for a longer trade but increasing my position by 20-30%,