No deal.
That was the takeaway from the eagerly awaited OPEC-Russia oil-production-freeze powwow in Doha on Sunday.
Following the news, crude oil futures gapped down below $38/barrel when the futures market opened on Sunday night. Dropping nearly 7%, before rebounding and only finishing the day down 1.5%.
Crude oil managed to close above a key support level at the $39.25 level based on the nearby futures, a very bullish signal.
Overhead resistance still stands at $42 naturally, followed by $45. Overall, oil is doing what my neural net models called for, a largely sideways correction that will lead to a new level up in the spring to the $50 level.
What sparked the sudden turnaround? First was the start of a rare oilfield strike over wages in Kuwait that took more product off the market than would have occurred as the result of a successful production freeze. And the second came from comments by Doha participants indicating that the Saudi and Iranian positions on a freeze might not be quite so far apart as they seemed.
So, hold your oil-related positions. The wait for the next leg up should pay off in spades.
Now, gold. Any changes in trend in gold? None whatsoever. Merely a sloppy, go nowhere mess. Worth sticking your neck out? Hardly.
The trend remains negative, with the next move likely to bring gold down to support at $1,202, then bust through that to the most important support level at the $1,180 to $1,160 level.
You have bearish positions in gold and silver. Hold those positions and await my signals. These positions have terrific profit potential once gold breaks down from its recent tight trading range.
Now on to my new recommendations …
New Trades:
Time to get long volatility. The equity markets are at new highs for the year and the S&P 500 and the Dow are closing in on all-time highs. This has sent the VIX Index plunging back to new lows on the year. Therefore, this is an ideal set up for a low risk long entry point to buy ProShares Ultra VIX Short-Term Futures ETF (UVXY).
Gold miners have run a little too far too fast. So, my recommendation: buy call options on Direxion Daily Gold Miners Bear 3x Shares ETF (DUST).
Here are the details:
|
ALL Members: 1. Using 5 percent of your trading funds, buy ProShares Ultra VIX Short-Term Futures ETF, symbol UVXY, at the market and place a good-till-cancelled protective sell stop at $12.90. 2. Using 2.5 percent of your trading funds, buy the June 17, 2016 Direxion Daily Gold Miners Bear 3x Shares ETF call options, strike price $2.00, symbol DUST160617C00002000, at $0.45 or better, good till cancelled. Alternatively, if you are not trading options, using 2.5 percent of your trading funds, buy shares of Direxion Daily Gold Miners Bear 3x Shares ETF (DUST) at the market and place a good till canceled protective sell stop at $11.50. |
Do not chase the market on the call option. If anything needs to be changed regarding the option order, I will immediately let you know.
Stay tuned and best wishes,
Larry
