Sunday, April 01, 2007

 

Sunday Short Strategy

click on chart to enlarge
The final post this weekend will outline a strategy for my other short idea in the oil arena. Today's candidate is GulfMark (43.65). GMRK made an all-time high two weeks ago and since has proceeded to carve out an "M" type of topping formation (beige trend lines). This week's retest resulted in a lower high on tepid volume (red arrow). Similar to VLO, this stock has been in a strong uptrend since early January. A move below 43.5 will invite the trend followers to take profits in light of the completed "M" top formation and declining volume pattern (purple trend line). I would recommend shorting all the way up to 46 with a downside target of 33.50 providing another 4:1 risk to reward trading scenario.
As you can see my ideas are based purely on technical tells. It is humorous to hear many of you passionately argue the perils of shorting oil to which I say "take off the g-string you pussies". I could care less what the risk of trading the underlying entity is or the current market psychology, my goal is to correctly assess the supply:demand situation for the equity while exposing my capital to a limited risk and ample reward setup. Thank you for your input and taking time to post your comments this weekend. I would have never known that 'Oil Barrel Bolling' is short oil since I make a conscious effort to not watch CNBC and have yet to watch an entire episode of that show. Be sure to check out my blog http://www.50kto5m.blogspot.com/ later today to help develop the thesis on my Fat Bastard pick.
UPDATE: The Fat Bastard pick has been posted on my blog. Check it out and be sure to share any relevant insights.

# posted by Kidstock @ 11:09 AM
Comments:
Nice. I like this stock short too and you're right about the risk/reward being in your favor, you may call this a low risk entry.
# posted by Anonymous Anonymous : 1:15 PM
 
I do like this chart for a short term trade.
# posted by Blogger nncoco : 1:55 PM
 
I did call this a low risk:reward entry. Thanks Counsellor...
# posted by Blogger Kidstock : 1:55 PM
 
Long it seems reasonable to expect oil to continue to rise. Peak oil may be a paranoid fantacy, but the fact is that it is harder to get the stuff then it used to be and demand is rising.
# posted by Blogger nncoco : 3:22 PM
 
Sorry about the long messages, I don't want to start a trend, it won't happen again.
# posted by Blogger Crude Broker : 6:31 PM
 
Again this looks like a great short however I have to point back to Iran and the dirty arabs. They are letting all hell break loose this evening and one misfired shot will send oil to $80. I like the setup if we were not on the brink of an explosion over there. Obviously defined risk with stops but what happens in AH which is there day time worries me. I don't want to turn on my screen in the morning to a huge gap higher. Staddles might be a better play if we expect volatility? Thoughts?
# posted by Anonymous Anonymous : 7:24 PM
 
Hey Kid one more thing, again thanks so much for your posts, I think your doing a wonderful job, what do you think of this analysis of oil?

http://bp2.blogger.com/_N9xrCjjHNRw/RgwulfBfktI/AAAAAAAABYk/HObiA9_lF0U/s1600-h/reqwa.png
# posted by Anonymous Anonymous : 9:27 PM
 
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