Oil’s Going Down… Here’s How to Play It
Feb 27th, 2009 | By Charles Delvalle | Category: Chart of the DayWhen it comes to the oil markets, volatility is the name of the game. After seeing prices of nearly $150 a barrel last summer, oil prices have dropped to about $45 a barrel. Will prices move higher anytime soon?
Not likely.
As you can see, Light Crude Oil ($WTIC) has formed a nice little downwards channel trend that stretches back all the way back from its November highs.
Combined with a Slow Stochastic (bottom of the chart) and the Relative Strength Indicator (RSI) (top of the chart) that show oil as approaching overbought, the indication is that oil prices will move down.
This morning, oil prices reacted negatively against that trend channel and lost value.
This confirms that the bearish trend line should continue and that we should see lower oil prices in the weeks ahead.
A great way to play this situation is to short-sell the United States Oil Fund LP ETF (NYSE:USO).
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Charles Delvalle is a self-taught market-timing professional and value analyst who's followed and invested in the market for the past ten years. He uses a unique combination of technical and fundamental research to pinpoint rapid profit opportunities with stocks and options.
Charles is also a staunch contrarian and takes pride in finding undervalued sectors and discovering undervalued, cash-rich companies. He frequently mocks government stupidities and points out the "inaccuracies (or lies, take your pick) that government reporting frequently dispels as "truth".
