About Me

Retired chief investment officer and former NYSE firm partner with 40 years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Sunday, August 07, 2011

Putting Oil Back On the Trades List

I exited the oil market in early Apr. with the oil price up around $110 after nearly a year of nicely
profitable long side trades ( Oil Price -- Thanks For The Memories). Playing here can be a decent
way to hedge higher heating bills for a couple of years.

Reflecting several months of flattish global industrial production, a bump up in Saudi output and the
heavily heralded end of QE 2, the oil price has taken a fair tumble down to $86+ (WTI). Oil is now
in a pronounced downtrend. It is well oversold currently and is at a key pivotal juncture in the $86
bl. area. Chart

I am adding oil to the list of long side candidates. I am ok with oil in the mid $80s, but would prefer
to see it down in a range of $70 - 80. But, since the markets often do not give us what we want,
I'll play it from the mid $80s if needs be. The weakness in global equities and PIIGS sovereign
debt has bestirred the CBs and fiscal authorities in the West. So, dispensation of calming balm
of some sort may be in order in the days and weeks ahead, and that could work to reverse the
steep downtrend in the oil price. Time now to be both alert and flexible.

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