A Synthetic Visual and Tightening Stops Again

Oil vs Corn

The grain markets have more or less been trending sideways now for 9 months due to burdensome inventories and no fear of running out of grain.  The constant chopping of price makes profiting from your marketing impossible unless you are a day trader.  Oil on the other hand has been moving like it normally does in large daily cycles of 30 to 50 days and larger intermediate cycles of 25 to 33 weeks.  They are so predictable that you could nearly put them on a calendar.  You will get 2-3 opportunities a year to buy oil at the bottom of these cycles.  If grain is not in any sort of tradable move like we are in now, trading oil instead will make your life so much easier.

​In the chart below, I am attempting to show how much easier buying and selling oil is compared to corn.  When you combine the cycles with the sentiment readings from Sentiment trader, it produces trades which are much easier to manage.

Tightening Stops Again

Oil has moved into the resistance zone I warned about Wednesday.  This is a critical area.  If price can break out and close above $49.50, there is pretty much nothing standing in the way of $52.50.  If price cannot break through, then my concern about sentiment is probably about to be realized and oil will make one more drastic move lower. 

If we tighten the stop to $48.4, we will guarantee making at least $400.  If price falls below that level, I think there is a very good chance we will see a lower low.