Spread Betting Opportunities: December 03, 2007
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Monday December 03, 2007
This edition of Spread Betting Opportunities assesses the immediate outlook for Nymex Crude.
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Before I go ahead and outline my views for the week ahead, I want to take a couple of minutes to map out the timeline of the last few calls that I have made on Nymex crude prices.
The last time I looked at the Nymex in the Monday November 19, 2007 edition of the 'Spread Betting Opportunities', I stated that:
From current levels, the technical evidence suggests that Nymex would now retest the recent highs around $98.62, with a strong likelihood that we see a new high for the year over the next few trading sessions. As always, conservative traders should be mindful of important support areas and place stop losses as appropriate.
At the time of writing that analysis, Nymex was trading at $93.84 and the chart as at the previous close looked like this:
Within a week of publication however, Oil prices had rallied strongly as expected and the updated chart looked like this:
At that point, Crude was trading at $98.18, representing a gain of over $4.34 or 434 spread betting points!
I often tell the subscribers to the Market Timing Update that the time to start thinking about exiting a profitable spread-betting position is when the market is still strong.
By the end of trading day on November 23, it was becoming increasingly obvious that the sharp rally was all but over!
In the Monday November 25, 2007 edition of the Market Timing Update (which was sent out to subscribers on the preceeding Sunday evening), I stated that:
Nymex crude has once again provided solid gains since I called for a renewal of the price rally and went long a week on Friday. Over the last week, Crude added another 434 spread betting points, to close the week at $98.18. Indeed, the high for the week came in at $99.29.
Following such a strong rally, the technical picture now looks more subdued and we could see another pullback in prices.
Within a few days of that call in the Market Timing Update, the chart of oil (Friday November 30, 2007) looked liked this:
Now, that's what I call pin-point analysis!
Short Term Market Outlook: Nymex crude
Nymex has now pulled all the way back to the medium-term support line currently at $88.53. Despite the strength of the
decline over the last week, that may well have been nothing more than a corrective pullback in the context of a wider
uptrend. However, a sustained break below that price support area would be more sinister (from the perspective of bulls). In
the event of such a break, prices may fall all the way to $80.
In conclusion, while there is the potential for a continuation of the price falls from last week, conservative traders should wait for a clear price break as outlined above as a confirmation of such continuation. Caution is called for in
opening new shorts at this point as the current price area is close to important price support and as such could provide the
impetus for a sharp bounce higher.
Key price trigger levels for the Nymex and indepth analysis of the outlook for the major equity and currency markets are
outlined in the Monday December 3, 2007 edition of the Market Timing Update. The Market Timing Update is published three times each week.
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