Looks like you might be right RSOTC. Trump’s tweet was BS, just him trying to pump the market before the weekend. No deal between Saudis and Russia. Bull trap.

Thanks, Randy. I closed out my remaining longs in USO between your previous T1 and T2 targets and went home short with SCO. Have a great weekend!

I’m not a big fan of 1:1 or direct hedges like that but I’m sure you’re broker is (as they get the extra commission or make money in other ways, such as selling your order flow to the HFT‘s). If I was long USO & was concerned about a pullback, I would either raise my stop to protect profits or just close the position out, especially if it was at the level that I was targeting (price target).

Crude still holding & continuing to build on the earlier gains but keep in mind that the weekend is coming up, which means 2 extra days of overnight risk if you take the position home tonight. Best of luck whichever way you go.

I think the LQD short will pay off nicely in time as it is in what I think is a no-win situation: COVID-19 blows over & the economy & stock market starts to recover, Interest rates will almost certainly go higher. As such, the value of the bonds will fall as the prices of bonds are inversely correlated to rates. At best, any boost in the value of the bonds from a diminished risk of downgrades is likely limited to the recent all-time high in LQD, as that would have those bonds priced back where they were earlier this year when the economy & stock market were firing on all cylinders as if the end was nowhere in sight. That is just 11% above current levels.

If things get worse, LQD will continue to see a good chunk of that the large portion of BBB rated bonds get downgraded to junk status, causing the price of those bonds to fall (and then be sold out of LQD at potential fire-sale prices). With the Fed taking us back down to a ZIRP, there is very little upside potential in LQD but a lot of downside potential. Either way, just one trade idea with above-average profit potential & an attractive R/R at a time where both hard to come by.

ErikTownsend @ErikSTownsend did a great piece on oil supply/demand in relationship to storage capacity over the next few months: 1-18 tweets this morning

USO has rallied smack into T2 from the recent long trade for the 2nd time after hitting & pulling back 15% off that target/resistance level yesterday. That was the final official target on that recent trade & may still be the end-point for this rally although if USO can take it out with conviction, the odds increase for a rally up to that potential T3 target around 6.40.

I can’t advise you to sell or hold but I can share my thoughts & that would be that crude will likely hit those pullback targets that I posted above. If you want to hold out for additional gains, maybe consider tightening up your stops to protect profits while allowing the position more room to run. Best of luck on the trade & congrats so far.

thanks Randy

I’ll let others chime in but given the choice of trading off the charts or the headlines (news), I’ll take the former vs. the latter all day long. Besides, so often and especially with something as big as crude, with so many private & political entities involves in those decision making processes like you speak of above, that ‘news’ is quite often already priced into crude by the time the headlines hit the press. Sure, there have been & always will be big spikes & drops in crude on news of production cuts, agreements, etc. but even then, the charts are almost always setting up as bullish or bearish before the big move, just as they were for the past several days leading up to yesterday’s biggest single-day gain in crude ever.

Probably the latter would be my guess but there are others here more versed in the fundamentals of crude so hopefully, someone else can chime in. I put a much higher weighting on the technicals (charts) of crude than the fundamentals although all the cuts in the world aren’t going to help with the current collapse in demand as long as the Coronavirus situation continues to get worse, especially in the countries that are the largest consumers of oil, such as the US.
Well, technically speaking, massive production cuts would certainly move the needle on crude prices but I believe that talks & even promises of cuts are mostly empty rhetoric. Saudi Arabia must be in a world of pain right now, fresh off the Aramco IPO as well, but also think about other big producers like Russia & Venezuela. They don’t want to pump at these prices but they have little to no choice if they want to keep the lights on. I think the producers are going to keep pumping because selling oil is their lifeblood. No easy fix when demand has collapsed as it had. Best to just follow the charts & wait patiently for the most objective long & short entries for quick in & out swing trades.

thanks Randy, LQD looks about to crack too

-Stocks down (SPY, QQQ, /ES, /NQ, etc.. still just consolidating while stalling out up against resistance) so still objective short entries on the indexes IMO
-Crude offering an objective short entry, as per above.
-/GC gold futures broke above a bull flag on the 60-mine chart & are backtesting the flag from above now. Not the optimal follow-thru for a breakout from a bull flag but an objective long-entry or add-on to gold here nonetheless.
-/PA palladium starting to crack down below that key 2116ish support after struggling to cling to it over the past couple of sessions. Once the stock market rolls over, which seems imminent to me at this time, palladium will likely follow suit. Hence, still an objective short entry or add-on to PALL at this time.
-Big positive divergences building on the /NG nat gas future 60-min chart although no hard buy signals as of yet.

I don’t think this is likely, but if someone in DC wished it to happen I do not see how something like this could be implemented.

Don’t forget USA exports a lot of processed Oil products and I guess some of those countries (eg MX & CA) could do similar to protect their local Oil companies too?