Spread Betting Opportunities: February 04, 2008
Spread betting opportunities present my analysis of the short term outlook for the financial markets. I analyse what the recent movements in the markets may imply for the immediate future in equity indices including the Dow and the FTSE100, currency pairs such as the Cable and commodity markets such as Nymex crude.
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Monday 4 February, 2008
This edition of Spread Betting Opportunities maps the path for Nymex Crude in the sessions ahead.
As regulars readers would be aware, the last time I looked at the Nymex in this section of the website was in the Monday January 21, 2008 edition of the 'Spread Betting Opportunities', in which I stated that:
"After losing 224 points over the last week, the technicals for oil are starting to shape up for another run higher in the week ahead. The evidence suggests that so long as prices can hold above $88.60, then we should get a move towards the price target within the band $92.97 to 93.25. That represents a potential move of over 300 points in the trading sessions ahead."
At the time of writing that analysis, Nymex was trading at $89.92. Within a week of publication, Nymex Crude Oil had
rallied off those lows to hit the price target outlined in that outlook. As at end of trading day on January 30, the chart for Oil looked like this:
Indeed, Oil price topped out around $92.70 during the middle of last week, representing a gain of about 278 spread betting
points from the price at the time of publication.
As I have emphasised numerous times in the past, the time to start thinking about exiting a profitable spreadbetting position
is when the market is still going in your favour. In the Monday January 28 2008, edition of the Market Timing Update (which was sent out to subscribers on the preceeding Sunday evening), I warned subscribers to beware entering new long positions around $92.70 as the commodity was susceptible to renewed selling pressure. As things turned out, Oil topped out within a few days of that call.
Now, how's that for accuracy of market timing?! The current chart of Nymex crude is presented below:
Short Term Market Outlook: Nymex crude
As expected, oil prices retreated from the price resistance area depicted by that trailing blue line in the chart above. The loss of $1.75 for the week was pretty much down to the sell-off on Friday which resuslted in a loss of $2.79 for the session. From a techcnial perspective, the strength of the sell-off on Friday (February 1) suggests that the bears are now firmly dug in around that price area.
At this point, we would expect the selling pressure to continue until a price support area is reached. The next important
support area is around $86.50—which is still some 200 spread betting points away from current price levels.
Below there, prices should retest the recent lows set around $85.40. Only a move above $92.70 would clearly invalidate the ongoing bearish outlook.
Overall, price momentum is clearly to the downside and the outlook for Nymex favours the bears at this point in time.
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