crude oil

[jeff]

Hi every one, what do you think about crude oil. $44.50 seems to be a very attractive price compare to $147 not long ago. sooner or later oil will come back, it can not stay this low for ever. that's my opion anyway. i want to buy some crude oil through ETFs like HOU.TO or USO, buy and hold for the long term. what do you guys think? any suggestions? thanks.

[garilou]

Hi Jeff,

You write:

it can not stay this low for ever

This is was Bryan was saying a few weeks ago...
Some say it will go down as far as $20!
As others said in July it would go up to $200.00.

I wonder why you ask us. There are so many charts!
Do you think that a "go ahead!" from one of us would take some responsibility of you shoulders if ever you loose? (Joke  )

Still I'll tell you what I think:
Look first at this chart:
http://futures.tradingcharts.com/chart.php?cbase=CO&market=CL&cterm=29 

Users from this site are
Bullish (30.30%)
Neutral (18.18%)
Bearish (51.2%)

USO is pretty bearish too, as is HOU.

I said somewhere else: I personally am NOT a bottom fisher, or a "skyscraper"(in the sense that I short a lot)

So on oil now, I would neither buy nor short.

You say you want to "buy and hold for the long term" : does it mean that, in the hope of Oil increasing in 6 months, you are willing:
1. to endure some (paper) losses for a while,
2. block some cash that you might need if a good opportunity showed up?

I do not think that the moment is well chosen for "buy and hold for the long term".
As I wrote somewhere else, my opinion is that in the moment, the market belongs neither to the so called "buyers" nor the "sellers" but to the day traders that are both in the same day!

If you have cash that you do not know what to do with, why don't you buy short term low return things like the iShares CDN DEX Short Term Bond Index Fund (TSX : T.XSB) that are terribly bullish in the moment, or whatever that looks like cash that you can get rid of pretty fast when you need the money?

I am not of professional adviser, so as they say "do your own diligence".
(But I've seen close relatives from me loose a lot with their professional advisers, coming to me in October and November, crying "I loss so and so much, what should I do?" when I kept telling them since July DO NOT TRUST your "adviser")

OK, I wrote that for you, so please give some feedback about what YOU decided.

Louise

[jeff]

Hi Louise,

thank you very much for your advise. I think i should wait to see the clear uptrend in crude and then put big money in. at this time crude may go up, may go down, so the risk of losing money is still high (at least for the very short term.)

i thought about buying crude, because i thought the the market sometimes goes to extrems: when oil at 140, they talk about 200; when oil at 40, they talk about 30, 25... it seems like oil is like water and nobody wants oil. i don't think OPEC will let the price drop to 30, 25. right now they are already talking about big production cut.

anyways, a little bit more patience won't hurt. i will keep an eye on the crude market.

[garilou]

...a little bit more patience won't hurt. i will keep an eye on the crude market.

Good idea.
But this does not mean that some stocks linked to Oil cannot do well, like PCA, in the moment, seem to have a pretty good momentum, at least short and medium term. They profit from a low oil price.

Louise

[garilou]

It worth what it's worth...
Just came out:

TD Bank economists predict global slump will drag oil to US$30 a barrel
Tuesday, 16 December 2008 
http://www.lethbridgeherald.com/content/view/16442/31/

Louise

[bryanmcn]

Here's another chart
http://futures.tradingcharts.com/chart/CO/M
Showing some support at $30
I agree with Louis that cash is the best position right now if you can only trade Canadian. The DOW looks nice though. Is there a way to trade the DOW in Candian funds - like in a Canadian ETF?

[garilou]

Hi Brian,

Once again, I cannot agree with your definition of support.
Exactly as for the DOW, where you looked for a support in 2002 or something like that, I can't imagine that you see a support for the Oil price that dates back to 2003!
There was something that I would call more of a support 2007, because it had been tested!
In order to be called a support, it must have been tested at least on time.
That 2007 support has been broken through, so IMHO, there is NO support.

A support as old as 5 years before cannot be called one, at least for a reference to what to look for in the next future.

PS: This is support:
http://www.investopedia.com/terms/s/support.asp
=====================================
As for your second question, (trading the DOW in CND$) as far as I know, I don't think so.The only one that tracks the DOW that I know of is a US EFT: IYY. You can put US stock in your RRSP, but is it worth? I have paid to learn that it's not very rewarding, unless you would look into a very long term and a very big gain. Now I wonder who would like to trade the DOW now...

=====================================
Because you don't mind being out of topic... have you followed that stock, Cangene (CNJ) I was telling you about when you asked for good chart? I was telling you "Not quite yet up to your $5.00 limit, but it could be soon." it has gone up from 4.50 to 5.50 since that day! And in pretty good volumes! (Today somewhat down, after such a run!) Went up when everything was going down...

As for the other ones, ATA has done fine for a while, until... I suggested a having a "good chart"    ,
And WN has not done too well, it was too high, but it could still rebound, you have a pretty good support around 57.50, and today it has done pretty well!

Louise

[bryanmcn]

Support can be 2 days ago or 10 years ago. Might not make sense but its true. Look at the DOW. It didn't break that 7500 mark. CNJ does look interesting but it is thinly traded. 

[garilou]

This time, really about Oil:

http://www.247investor.com/expert_investment_advice/archive/reader_mail1/

Louise

[garilou]

Sorry again, Bryan,

I think you make a confusion between an historic low and the technical sense of support.

You say "Might not make sense..." well no, it does not!
So tell me where you find another definition of support that would "support"  the way you say "it is true".

What you could say is that the DOW did not make another historic low, it is not the same at all as breaking down a support.

And yes, I had told you that CNJ was trading at little volumes, but because it is not a penny stock, it's "buyable" and "sellable" 

Louise

[bryanmcn]

I guess we tend to think that everyone trades with the same time line that we do. Many fund managers, investors and mutual fund owners won't change their portfolios for years or even decades. So the psychological effects can go back many years. Technical Analysis is all about psychology. I have read dozens of books on the subject and there is plenty of free articals on the internet.
If your really interested in figuring out how TA works I recommend "Technical Analysis of Stock Trends" by Edwards and Magee - Its the bible of TA.

[jeff]

it may be true that the further the data goes back, the weaker the support will be, although it might provide some support. especially right now when the market is full of day traders or very short term speculators, a historical low point back many years ago may not tell very much.

but i still think that oil can not stay this low for ever. for long term investors who really can hold many years down the road, will be richly rewarded. i bought some hou.to, not for trading. even it dropped another 20% from it's current price, i won't panic and i won't sell it. i just hold. hold until i see fat profits which i think sooner or later will come. crude, the so called "blood of the modern world", does not deserve to be treated like this. they dump oil like garbage.

[bryanmcn]

I've been tempted to buy HOU as well but the trend right now is too strong and  ... well... down!

I did pick up HXU and HGU though.

[garilou]

Hi Bryan and Jeff,

It's true that HOU seems to have a bad momentum right now, but there have been huge volumes on Thursday and Friday!
One never knows...Jeff might have seen right!

Although I think that this year's so called "Xmas rally" will be a down rally, because lots of people will want to cash their losses before January 1rst: they can put them against the 3 previous years capital gains.
I might have waited after January 1rst.

But since Jeff intends to hold on firm and is not a bottom fisher (as I am not too, except the opposite way) , and is ready to have a 20% paper loss (which might not be 20% but much less), it is his strategy.

But I do not find HXU  much more attractive either...(not yet at least): I don't understand why one would bet on the S&P now, even if it is called  S&P 60 BULL !!!

I like HGU better. Gold might become again the "refuge", but it is also quite volatile.
As Jeff said (and I agree 100%), the market is now pretty full of day traders who have a predilection for ups and downs.

If I was to buy now, (which I might Monday, because I sold something Friday, somewhat too early, but I need some cash in my RSSP), I'ld look in something else, not too much linked to futures or commodities.
But if so, HOD seems to have a much better look!

Otherwise, I'ld go into stocks that produce things that people must buy, financial crisis or not!

We have been talking lately of WN. This is one of them! It has retreated somewhat from an overbought state, but now it seems to be bouncing back up.
The rumours of buys and mergers are not good for Bimbo but might be very good for Weston.

It has now a very strong support around 58 - 58.50, a few resistances overhead too. Both Lows and High are bullish, and I think the resistances might not be too hard to break.

I might bet on this one Monday!
"Buy the rumour, sell the news": Bimbo might not be able to finance this transaction.
Won't be a long "Buy and hold" though...
But if I can get it slighly lower then Friday's close, (around 58.30) it could go up to 63-64!
For a quicky, that's enough for me.
And I think I have a "superb" new short for Monday too.

Good luck to all of us, since SSP has not yet switched off its DOWN signal, we have to search on our own like big boys and girls.
 
Louise