Friday, June 20, 2008

Bubblin' Crude Finally a Bubblin' Down, Caution

Good morning and good evening. Crude oil looks to break into the $120s Friday. The Psychology of the Call team (POTC) feels 'freaky Friday' will be a lot more interesting as crude continues its fall. POTC has had crude oil 'failing to break down' as one of the seven negatives against the bull argument. As crude prints a twenty dollar handle Friday, it will make for a very interesting and extremely volatile options expiration day. The alternative energy plays like First Solar (FSLR), Canadian Solar (CSIQ), and Energy Conversion Devices (ENER) will make smart put/short trades. POTC remains bearish for the other six negative reasons, although the psychology of investors seeing crude in the $120 range will cause portfolio adjustments, but especially exiting alternative energy stocks. The talking heads on CNBC will emphasize the word 'bubble' like a broken record all day Friday, so we wanted our option traders to be one step ahead of that herd. Crude oil closed down $4.70 Thursday, and nearly $3.00 of that fall occurred in the last 60 minutes, so caution is warranted. Here's a Barclay's chart that mimics price per barrel, ticker "OIL":



IF crude falls more than $5.00 tomorrow, that would send it to the mid $120s, and fear of sub $100 crude will be hotly debated. IF crude oil opens down over $2.00 Friday, we recommend shorting or buying puts on the stocks mentioned above, even if only for a day. 'Freaky Friday' will live up to its name, no doubt. Lastly, if crude closes in the $120s Friday, it will have to be monitored Monday and all next week to verify whether the break is a short term occurrence, or long term trend. IF this turns out to be a long term trend, it will have to be released out of the negative factors that weigh on the market. Please use this time sensitive information for trading purposes only, as crude oil in the $120s still has detrimental effects on the economy, yet offers our readers tremendous short term opportunities. Thanks for your Thursday night attention, please vote in our poll, the Psychology of the Call team.

5 comments:

Anonymous said...

Crude breaking the $130 mark would be very good for all, let's hope it happens.

StockWatcher said...

crude is back up this Fri morning..

StockWatcher said...

the >20% jump in some of the airline stocks yesterday was a great short opportunity - I made some quick change shorting United and Delta yesterday and covering this morning.

The Call Team said...

Alternative energy stocks are nonetheless extremely sensitive with falling or in today's case rising oil. Rising oil creates wide economic demand destruction, and solar panels are not immune, agree?
The Call Team

StockWatcher said...

ESLR rather than FSLR would have been a good short today, especially after the 20% run-up yesterday.