Oil hits $80, Stochastics up, MACD up --> Long --> $300 profits
5 min Emini Nasdaq 100
Hi,
Market gapped down today, but it quickly recovered and went a long way up in the morning session. I missed the gapped closure and the first leg of the up trend. There were no signals for me to enter.
My chance came at around 13:25 when price was already battered down near to the moving averages and stochastics started to turn up. Short-term MACD also started to turn up. I long 1 contract at 1997 and another 2 contracts at 2000. I exited at 2004 when stochastic started to turn down when price hit the 2004-2005 region which is a resistance line formed by the mornign session. I exited with profits of $300.
All in all, this was a difficult trade, price movement was sluggish and there was not really a lot of room left for movement in the first place. I took the trade because my stop loss was tight. at 1993, if it breaks below the moving averages I was prepared to exit immediately..
Fundamentals:
Although this was not part of the trading decision, its an important piece of news that could affect the general economy outlook:
Oil futures prices rose sharply Wednesday, briefly climbing above a record $80 a barrel after the government reported a surprisingly large drop in crude inventories and declines in gasoline supplies and refinery activity.
The report from the Energy Department's Energy Information Administration suggested oil supplies are tightening as demand remains strong. That's why oil prices are rising despite OPEC's decision on Tuesday to boost crude production by 500,000 barrels per day this fall, analysts said.
Despite Wednesday's jump, oil is still well below inflation-adjusted highs hit in early 1980. Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today.
Oil's recent advance has been largely due to speculative buying by big investment funds, who are responding to a price structure in which oil contracts for delivery in future months are cheaper than the current front-month contract