I am with Bill. I have followed market cycles of various commodities and stocks for several years now. If I was long on oil I would sell. The market may go higher but right now it is too volatile and dangerous for me to bet either way. If the shorts start to stampede the price will fall dramaticly very quickly. It will be interesting to see what happens over the next 60 days.

I truly believe that the run up in oil is purely speculation. Over the past year supply and demand economics have had no bearing on the market nor the new world love for oil. This is the beginning of the new crash that will take several if not many years to recover. I believe that the only way to shore up the dollar is to raise interest rates. Has anyone researched what oil has done with the rise and fall of T-Bills? I think the answer would stun wall street and more. Then if you were to add in the price of gold and track these three for say a five and ten year span, the chart will amaze you.

I don't buy all the spin from T Boone Pickens or our government about the rise in oil.

A couple of weeks ago when the market fell hard on a Friday and gasoline reserves reported down, what happened to oil, it went up. Then the White House said it was going in crisis mode. Where has our government been before now. And why are Americans everywhere just letting this disaster continue to grow?

Here is part of the story today....

"It's a combination of things," Phil Flynn, analyst at Alaron Trading Corp. in Chicago, said of the run-up. "People are buying oil because they're worried about tight supplies, the weak dollar, war breaking out in Iran. It doesn't look like any of this stuff is going to settle down any time soon."

Read all of the story http://biz.yahoo.com/ap/080702/oil_prices.html

The oil index, XOI or $XOI, is making new lows for the month. $WTIC another oil index is making new highs.

That tells me oil is getting weaker and is setting up for a small correction. But when???

I wish it would hurry up as I'm playing on the short side of oil.

Good Day

T_Bone, a little market advice "Never stand in the way of a frieght train."

I believe oil is going to pull back, but I would never short it as the momentum is to the upside. Oil is going to pullback, and it may make a good entry point. But I don't believe the risk/reward ratio currently is to the short side.

At sometime in the future oil will fall even further and strip alot of people of their wealth. As the margin price of a barrel of oil is $50-55. Anything above that is the "paper price."

The opposite is people trying to catch a falling knife when the market is going down.

I believe in "market timing," and do very well. I do not believe in market "anticipation." That is a sure way to take a loss. I always like to be into the black, once I have made an entry. I then stay there by placing a trailing stop.

Wether you feel the market is overbought, or over sold. Just remember it can be that way longer than you or I could stay solvent trying to anticipate it with our money.

Green Lights
Badwater Bill

Hi Bill,

No worry here. I'm a chartest, that is to say I try to trade stickly by the charts. Sometimes I get bit but it works for me. The index looked liked it bottomed today on it's 200day MA so I'll be looking at going long Monday.

Good Day

Hi T_Bone, Well I think your right on. I agree the market did bottom. We should start a bull market ralley next week with the shorts covering, then a little pullback or consolidation, then institutional buying should kick in and keep it going, we will see...

This will be a bull ralley in a bear market, and will only ralley for 6-8 weeks. Then by all indicators we should go a lot lower than we are now.

Thats the way I kinda see it. But I am not very good at predictions.

Its good that you are a chartist, I use about 28 technical indicators (sounds like a lot) but only a few are really the primary ones. I have a couple that are proprietary that I have developed over the years that seem to work well.

I am for the most part a "market timer" with short and intermidiate time lines being the ones that I use with this market. I have few holdings longer term at the present time.

Like you, I do short the market from time to time if I think the risk/reward ratio is to my benefit.

Green Lights
Badwater Bill

I commend all of you for being technical analysts. Really dont think that has anything to do with the price of oil. It is time for evetyone to take their heads ouit of the sand and face realities. Inflation is rampant. Unemployment is high and getting worse. Many mfrs. will not survive this time. Chrysler fdor one will go down unless a Chinese or Korean company buys them. RV and boat mfrs. are suffering. On top of this we have these all time high oil prices. Analysts in Canada are prediciting $200 oil by early next year. I say by Fall. Others are saying that oil is at the half way mark. That would mean $300 oil!! Today's price of fuel is already changing the N.A. lifestsyle. It will change even more in the next year. Many of us will not be able to adjust. Scary!!!

moisheh,
Did all the people in China and India just start using oil this year? I do not dispute what you are saying (except that it is probably GM and Ford that have the most to worry about. Chrysler is already private equity owned and can be sold off in parts tomorrow without any approvals needed.)
Yes, analysts are predicting 200 and 300 dollar oil. But are these the same analysts who were telling us not to worry about the fact that most Ecommerce companies had no earnings during the internet NASDAQ bubble? They said it was a "new economy" and we didn't understand it. It made perfect sense to them that a company could raise billions of dollars and start selling groceries online.
The current runup in oil prices looks to be a classic bubble forming and we will just have to ride it out.
Diesel prices are already down about $0.20 around here. I paid 4.99 near my home last spring and it is now about 4.69 and others are about 4.79. Actual useage of gasoline is falling now in the U.S. and oil cannot sustain $150 per barrel if useage drops here.
But all this is not to say that oil will be cheap once again except right after the bubble bursts. It will cost a lot to convert shale and tar sands or to pull it from 10,000 ft below the gulf where the water is another 5000 ft deep.
We are not at the top of this bubble until people just start abandoning their suv's beside the road and walking or other such dramatic things. When everyone is in a screaming panic you will know the oil bubble is about to pop. There are still 2 large Hummers in my neighborhood that drive to work every day. If I see those people go by on bicycles I will know to short oil!!

dontay: I kind of chuckled when you mentioned the oil sands. Seems that in the USA the tar sands are not the flavor de jour. California . Obama and a group of mayors have declared the tars sands to be environmentally unfriendly. They are under the misguided opinion that this method of extracting oil leaves a huge carbon footprint. But in actuality it is no worse than Mexican crude and a lot of other oils. SO; there is talk of building a new pipeline and using another in reverse to get this oil to other markets. People in Canada are shouting: Let them freeze in the dark. As for the price of oil only time will tell. As an investor and a businessman I am scared. I have never seen so many commodities go up so quickly.

Moisheh

Good Day

One of the primary reasons oil is priced so high today, is the fact that our government has failed to govern, and therefore has failed the people. But this is rarely mentioned by the media and others in the know.

I will try and explain it in a pretty simple form, as I am not that good of a writer, and I don't care for long winded messages.

Several years ago (some of you may be old enough to recall) The Hunt brothers tried to monopolize the silver market and cut a fat hog.

But government immediately stepped in and passed laws to plug this hole. This made it impossible for speculators to have a "Monopoly" on any commodity market. Therefore speculators were only allowed to control a certain percentage of any commodity.

As a result no one could have a monopoly and control the price of any commodity. This protected the public from paying prices set by a group of speculators and it kept prices always close to the margin costs of producing the commodity.

With these regulations in place and preventing a monopoly, the market could then return to "supply and demand."

But as we all know, "Control and Power" is a human trait that is always trying to figure out a way to circumvent the laws.

In recent times "Hedge funds and large Banks" have teamed together, and found a way to basically get around the law.

What they have done in simple terms is taken what the Hunt brothers did years ago and used large sums of money to form a monopoly on oil.

The reason they can do this, is simple, they are not "Speculators" and therefore the law doesn't apply to them.

So they have been able to monopolize certain commodities oil in this case.

They also have a very strong Lobby in Washington, can wine and dine your concerned leaders. They also have very good marketing and can publish via the media etc. all kinds of reasons why oil prices are climbing. To keep you from understanding the real cause behind these prices. In most cases even the media is not versed enough, and therefore prints what they are given.

And as some of you are aware, most in this country will follow the media without question. If its in print, or on the news it must be true!

This has worked well for the media as they don't have to do as much investigative reporting, which reduces there overhead and gives them more profit. So as long as the public accepts less, it works for the media and its profitable.

Thats kind of it in a nutshell, perhaps to simple, but oh well I tried.

Think about this, look at how quickly oil prices have risen... Like Dontay stated above in his post and pointed out, is pretty much right on.

This situation is now being heard in Congressional hearings now. After it has gotten so out of hand. Due to power and greed.

But Congress didn't act as they should have a lot earlier. Now the horse is out of the barn, and the Banks and Hedge funds like what they have, Money and Power.

So putting a lid back on this is going to be a much more difficult thing than one thinks.

Green Lights
Badwater Bill

I had to chuckle this morning as I was reading the oil news. The reporters must think were all idiots as there now reporting the reason that oil is dropping is the same reports that they said why oil was making new high's. It's almost word for word for both directions.

I stayed short Monday as the chart followed thru to the downside. I'm not seeing awhole lot left on the short side unless the bubble has truely poped.

Since the "Powers that Be" control the drive-by media, then the only rebuttal area is Talk Radio which voices just the opposite stories and "Claim" to be the "Voice of Reason".

Radio claims to have a large audience, but I never hear people on the street discussing it. So they must have little or no impact on the situations.

Unless a Government group steps into the fray I see no reason for the "Bubble" to burst, only increase in size.

Since the Bubble owners also own the Government Groups, then why would things change.

Since Talk Radio seems to be a threat, albeit very small, then it's elimination would aid the Groups campaign. "A Threat to National security" as it were.

The following months, and even years, will be an interesting story to write about.
There is more to the word "Change" then meets the eye.
Happy Motoring.

It was interesting to watch oil fall yesterday morning as Boone Pickens was outlining his new wind power strategy on CNBC. His 4000 Megawatt windfarm is a huge investment. He is also paying for ads on tv about energy independence in the U.S. This is admirable but I believe what he is really after is a free transmission line corridor from Pampas, TX to the rest of the country. If he has to pay farmers and others to let him put in the lines it will really cut into the returns on the electricity produced by the wind. But maybe he can get the lines put in the right-of-way along I-20, I-40, etc.
However, to oil prices: China is failing all the environmental tests required for hosting the Olympics next month. As a result they are ordering a huge reduction in traffic and are shutting more factories. This may be creating a temporary drop in demand for oil and softening prices. Plus, there are always pullbacks on the way up for stocks and everything else. As much as I would like I can't get excited about a 2 day drop.

I would not trust T Boone Pickens with my trash or any other oilman(Bush)in today's debacle of oil prices.

For 6 years of Bush's administration we had a Republican majority in Congress and only now with a reverse in the majority does the White House blame Congress for the oil price mess.

Our government should stop the blame game and step up to the plate and take control and do their job to deal with this mess.

How about our government bailing out the American people who are suffering through this oil mess instead of bailing out big companies, let the banks fail and let the free market rule. Bad management in big companies is no excuse to bail them out. Look how many Enron executives got jobs in the Bush administration after their company failed.

Those who track the markets daily should track the Tbill interest rates with the rise and fall of oil prices. I think you will see a different picture, then what the media and Wall Street reports.

Don't you think the only way to strengthen the dollar is to raise interest rates?

Then people would get out of oil and the market.