I know nothing about Oil

Sad.... but true.

Had picked up on oil bottoming at $61 a couple of months ago. Expected it to get to $80 by Jan 08. However, have been surprised by the pace and extent of its price movement. Nearly $74 yesterday, with no end in sight. As a result, haven't remained invested in it, made scraps here and there, but nothing much to shout about.

I realise that I always get fazed by its volatility. My biggest fear is to buy at the top, and then get clobbered. In hindsight, had I stayed invested in oil continuously over the last 2 months, I'd be up close to $20K with just 2 contracts. Kicking myself - I saw the opportunity, but didn't capitalise on it.

Now, I see a rally developing in Gold (up $12.5 this week) - of course, even though I commented on it a while ago, I haven't done anything about it. Need to get a grip, and get a plan going.

Oil's not well

Exited my oil positions today - left it about 20 points too late, but c'est la vie. Charts show a bearish divergence - lets see what Thursday brings.

In the meantime, Gold is not encouraging, neither is the XJO. Guess, I'll check out the currencies, or else just wait it out.

On another note, finally was in a position to withdraw $1000 from my trading profits, and returned it to My Woman. After selling my oil positions today, I'm now in a position to withdraw another $1000. Never thought I'd see the day - just over a couple of months ago, I was down to nearly 40% of my capital, and very miserable.

Trading the first month of FY07-08

Not quite sure where equities are going just yet. I would prefer to trade a clear 100 point move, and since I'll probably get in 50 points from the bottom of the move, and exit 50 points from the top - that's a total move of 200 points that's needed. Right now the XJO is moving about in an 100 point range - not good enough for me.

Since the XJO takes direction from Wall Street, and since I don't trade overseas indices (not yet anyway), that means that the Street is undecided about where its going to go.

Have worked out a rough model of what I'm going to be looking for to see strength in the market:

1. A strengthening of the Dollar Index - for me this means a weaker USDJPY, signalling the return of the carry-trade; and lower bond yields signaling moderate inflation
2. That should usually be accompanied by a weakening in Gold prices, and a rebound in base metal prices.

The one market that I've been surest about this week is Crude Oil. Have several long positions, at an average of 7040 (WTI August 07). Hopefully, it gets to 7150, which is my immediate profit target. The weekly inventory report, due on Thursday, I feel will be bearish - with bigger builds in crude and gasoline, and better than expected refinery runs. Of course, I have no evidence to back this up, but I just feel its nearly time for Crude to correct to a mid-60s level. In any case, I intend to be long when the report comes out (if my target is not reached by then).