Crude Oil Soars
Research for Online Investors

by John Dalt

8/19/09

The crude oil trade came back with a vengeance today.  I have called oil the "trade of the year" but had become bearish the last three weeks.  We had broken the trend of declining inventories, the rally was running out of buyers and the general market looked lower.  I surmised that some of the “oil on ships” that was sold on futures last spring was showing up in port and oil prices would correct lower.

The Energy Information Agency (EIA) gave crude oil a shot in the arm this morning.  Inventory dropped 8.4 million barrels!  Gasoline inventory dropped 2.1 million barrels!  Diesel and other distillates dropped 700,000 barrels.  I can’t tell you how surprising these numbers are to me.  Get long oil, the trade is on.  Here are our familiar charts.  We have almost erased the build in inventory in one week!

We have lost profits by stepping out of the oil trade for the past two weeks.  I hate that, but there was no compelling reason to own oil when inventories were building, the dollar was strengthening, and investor confidence in the world economic recovery seemed to be waning.

If you cannot make a good argument to be in a trade, you are better to be out.  By my calculations, we have missed a 3% gain on crude oil, I accept that.  I was fearful of a 20% pull back.  Before you rush into the U.S. Oil Fund (USO), we should be a little suspicious of the big change this week.  It wouldn’t surprise me to see a big swing the other way next week.

We all know the self-serving nature of analysts opinions, you never know the master they serve.  My opinions, suggestions and observations are without any purpose, except to give you insight to what is occurring in the market.  With one bit of information, you may protect your nest egg or profit.

I accept NO money from any company or firm to push a stock or viewpoint.  Even if I agreed with them, I would not take their money.  You deserve that guarantee.  I have seen too many “pitches” only to discover the fine print that the company has been paid to promote the stock.

Subscriber J.A. wrote last night that he could not access the website through the links on our MarketToday letter.  After investigation, we discovered that J.A. receives our emails in text format.  The hyperlinks do not work in text format.

We send all of our messages in html and text format.  Some email providers may send the text format as it takes less bandwidth.  If you have a slower internet connection, the text format will load quicker.  We try to include a typed out link in the text format, but may miss them sometimes.  We will work for 100% accuracy. How do you know which format you are reading?  If there is a grey box around the message, and the fonts are different sizes, you are getting the enhanced html version, and all hyperlinks should work.

“John, I bought DUG and sold today, based on your information.  Between that and IMMR I have more than paid for your information.  Several of us discuss your information every day.”---paid up subscriber C. F.

Glad we could help.

C.F. mentioned he would like to join our “day trading”  service.  We don’t have one.  Our SwingTrader is NOT day trading.  We enter trades for three days or three weeks.  Some of them go even longer.  We look for technical value with a short-term expected gain.  You do not have to watch your computer.

Most subscribers enter their orders before they leave for work. The big difference in SwingTrader and the Long-Term Portfolio is we sell our winners and look for another horse to ride. Our Long-Term Portfolio identifies long term value and will hold winners until they violate the trailing stop loss, or some news makes us change our mind about the company.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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