Tuesday, August 2, 2016

Oil: $40's Importance

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*We've said we expect oil to go lower since July 11.
*We don't have a price target and are letting price decide itself.
*$40 is a critical 40 year level that we just reached.
*If it holds below $40 it has more downside near term.
We recommended an oil short July 11th (NYSEARCA:USO)(NYSEARCA:OIL)(NYSEARCA:UWTI). Since then we've pointed out critical price levels that have meaningful short and long term significance. We reached and closed at $40 in a hurry. We take that to be bearish and are watching to see if it holds.
On July 28th we showed that $40 is a key 40 year level. Traders often look for shorter term levels to have significance. We think a 40 year level has incredible significance.
Here's what we said July 28th on $40 oil.
"We see the next stop being $40. $40 is a major point going back 40 years. Breaking that is very scary and can flip people bearish. The next stop is $36. The next stop is $31, and the last is $25."
We quickly closed just at $40 as of yesterday. We'll have to see if we can close below it to tell us if it can drop further.
You can see we just missed closing below $40. About 5 bars in from the right is 2:30 PM. That is the time "pit" trading is officially closed and post-2:30 is considered after market. We judge the close based on 2:30 PM EDT.
It did not yet close below $40. We think it can.


Chaim Siegel has been working with hedge funds and mutual funds as an analyst and PM his entire career. Chaim specializes in earnings and predicts, analyzes and reacts to earnings and earnings events as well as developing current company stories with a hedge fund perspective. If you want his analysis real time sign up to the right for real time email alerts. #in, $spy, $qqq, $iwm, $vxx, $ycs, $fxe, $EUO, $YCS, ^GSPC, INDEXSP:.INX, #elazaradvisorsllc, CME Globex: ES Disclosure: These trades can lose you money and principal especially when using leverage BY USING THIS SITE YOU AGREE TO TAKE ALL RESPONSIBILITY FOR YOUR OUTCOMES AND LOSSES AND HOLD BESTIDEAS, ITS CONTRIBUTORS AND ELAZAR ADVISORS, LLC HARMLESS