Big Gains on Both Sides of Oil Trade
by Mike Paulenoff
February 6, 2015 • 6:31 PM EST
We played both sides of the oil trade this week with succesful results.
On Feb 3, ahead of the next day’s crude oil inventory data, we added USO puts in anticipation of bearish inventory news and a correction of its Jan 29-Feb 3 up-leg. We exited on Feb 4 for a 63% trade, and then added USO calls to capitalize on an expected recovery up-leg to retest the Feb 3 high. That 24-hour trade returned 72%.
It was a great week in general, in which all our exited trades -- including MOS (+3.1%), HAL (+3.7%) and XLE (+7.5%) -- were winners.
See crude oil chart below.
Mike Paulenoff is the author of MPTrader.com, a real-time diary of his technical analysis & trade alerts on
ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international
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More Top Calls From Mike
Back on August 18th, nearly two weeks ahead of ZM's (Zoom Video Communications) earnings report, Mike Paulenoff cautioned MPTrader members about the stock.
Mike wrote: "The price structure, which has pressed relentlessly lower (15%) since its 8/05 rally high at 404.35, is probing -- and trading below -- its 100 DMA, now at 345.67, and is considerably beneath its 200 DMA, now down-sloping at 367.20.
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AAPL, indeed, went on to stair-step higher to reach a high of 157.26 high last week, overshooting the upper boundary of Mike's 153-156 projected high-zone by just 0.8%. It then proceeded to initiate the expected bout of weakness that accelerated to the downside this past Friday.
On August 11, Mike Paulenoff alerted MPTrader members to a significant upside reversal signal in AMZN.
Mike wrote that "the 500 point decline is nearing downside exhaustion," noting a preferred downside target zone of 3180-3200.
Fast-forward to August 20, when AMZN pressed to a new multi-month corrective low at 3175.76.
On August 3, Mike Paulenoff alerted MPTrader members to the developing setup in AAPL that also would eventually impact the broader market:
Mike wrote: "AAPL continues to levitate within a high level digestion period and pattern off of its ATH at 150 hit on 7/15. All of the action since mid-July certainly resembles a Triangle pattern atop the May-July upleg from 121.68 to 150.
Probably the first price pattern both fundamental and technical investors learn to recognize is a Head and Shoulders Top. Rightly or wrongly, it is the Holy Grail of technical formations, striking fear into holders of the stock, index, ETF, or commodity that exhibits such a technical set up, while eliciting an opposite reaction from put owners and short sellers who anticipate huge gains captured by impending weakness.
