A Quick Look At Oil – USD Correlation

In case you hadn’t noticed – the price of oil has been falling¬†precipitously since September.

With the simple mechanics of supply and demand, larger U.S stock piles have been reported while U.S drivers (feeling the pinch of still “lofty prices at the pump”) are driving less. As of late we’ve also seen a strong U.S Dollar so that hasn’t helped much either.

I don’t feel we’ve got much further to go until oil reverses, and reverse hard.Perhaps another dollar or two max – with reversal coming in a matter of days.

Refiners may have already made moves on this ¬†– with symbols such as “WNR” already popping huge over the past week.

Forex_Kong_Oil_Refiners

Forex_Kong_Oil_Refiners

I’d expect that “this time around” we’ll likely see the price of crude reverse here around 91.70 – 92.00 dollar area, with the usual correlating weaker USD.

I’m going to start running short term technicals on stocks here soon, as well hope to offer those of you who “don’t trade forex directly” additional options and trading opportunities.

Dig up “oil related stocks” over the weekend and plan to get long.

13 Responses

  1. Andy Jackson. November 14, 2013 / 7:22 am

    Not the first chart posted to suggest this Kong. Does the delay in the Dollar rolling over mean that the drop will be more dramatic?

    • Pot Stock Watch November 14, 2013 / 7:40 am

      When you see oil at such a strong level of support down here – no kidding……I “hope” others are seeing it too!

      I don’t think the “drop” will be an more dramatic no Andy as…..USD has really been hard to trade with its “constant” back n fourth / then consolidation / then head fake / then spike etc…

      I’d need to zoom out to a weekly chart on $dxy for example ( or $usd ) and consider us rolling over here “around this level” – then making our way lower than the low 79….and lower and lower as the currency slides into “crisis area” through 2014.

      As for yesterday / today – it looks pretty much like business as ususal around an important area / turn. “Sideways” is a market dynamic I detest, but unfortunately have grown to accept. It cannot be avoided.

      Best bet at these points is to “ease into positions” or buy / sell around the horn, not getting to tied up in the “exact” level.

  2. simfly November 14, 2013 / 7:26 am

    Morning Kong,
    Did yesterday’s fed sponsored rally kill the kongdicator signal on the Nasdaq? Curious to hear your thoughts. Thanks!

    • Pot Stock Watch November 14, 2013 / 7:45 am

      No way!

      The Kongdicator looks ahead , and plots entry price / time a considerable ways “ahead” of when the original signal is tripped. So in this example…I got my “signal” on Fri – looking for entry around close Monday.

      Price went nowhere Mon OR Tues then “popped” Wed.

      Enrty is still sitting “waiting” a few points “under” where the original signal was created. Not to say one couldn’t now “move that level higher” as price has moved higher ( which is a great thing if you are looking to enter short ).

      Either way there is nothing ( absolutely nothing ) that would have me change direction / once Kongdicator and entry level is established. Price could go to the moon for all I care – I’m not in the trade.

  3. JM November 14, 2013 / 9:57 am

    Hi Kong,
    So you are still looking at a weaker dollar? The thing is that in really looks bullish on a weekly chart. I’m curious to hear more about why you see it doing down.

    • Pot Stock Watch November 14, 2013 / 10:11 am

      Weekly doesn’t look bullish to me at all JM.

      Flat out series of lower highs and lower lows – with this now being rejected at “yet another” lower high no?

      those zigs n zags look to be aiming lower in my books.

    • Pot Stock Watch November 14, 2013 / 2:58 pm

      Hey right on I didn’t even look into it specifically!

      Having traded WNR in years past…he.he.he….I just pulled up the chart while looking into oil!

      Thanks man..

  4. David November 14, 2013 / 7:35 pm

    EM currencies rocking here today Kong with the USD/MXN back under 13 thanks to Yellen. Yen trades are frustrating as I’ve been hoping for a pullback in USD/JPY so I could get long, but instead it’s over 100. I’m shorting some GBP/JPY and EUR/JPY here. Are you going to add to your position Kong or has this trade idea fizzled for now?

    Really looking forward to your stock analysis. For anyone looking for a long-term trade, GME (Gamestop) short all the way to single digits (it’s 57 right now; incredible!). It may take 10 years, but they’re going to be like Blockbuster eventually for those patient enough to hold on.

    • Pot Stock Watch November 14, 2013 / 7:45 pm

      Hi David.

      As I spend alot more time “laying in wait” than out there exposed to this market – plans are still very much intact, all be it – delayed “JPY wise”.

      Commod currencies getting a nice bump here for sure, as is the Nikkei.

      I’m afraid that perhaps many readers here are looking for a “free signal service” and aren’t really looking at things close enough “for themselves”.

      A day like today would have surely been “painful” should one have gone off half cocked looking to time this to the second.

      I re entered long GBP/AUD this morning and currently – that’s the only open position I have.

      • JSkogs November 15, 2013 / 12:12 am

        Ya yen longs were tough the last couple sessions. I’ve been weighting and unweighting yen longs for awhile. My original eurjpy short has almost retraced completely. I re upped several yen longs tonight. Patience is key…The move has yet to come. Added another short es contract tonight. That’s about it for exposure now. I’m full.

  5. Andy Jackson. November 15, 2013 / 11:08 am

    No signal service required here Kong. Over the last 18 months I’ve tried EVERY system, service, theory and strategy ever conceived (in demo). Until you taught me to “align the stars” fundamentally and technically the results were erratic. The insights given in your articles are more than enough to formulate trade ideas and more importantly dismiss them. Don’t change.
    After my first month of real money, extremely conservative trading I’m 5% up after losses and happy as hell. Our sincerest thanks from Mr & Mrs Jacko – your gonna change our financials mate. Hats off from the UK.

    • Pot Stock Watch November 15, 2013 / 11:18 am

      Well thanks Andy that means alot.

      I do plan to get this formalized and offer a members service, as I’ve been busy working away on it “behind the scenes”.

      Eventually ( I need to purchase several more servers ) but….I plan to crunch the “kongdicator” into something that will work on a much larger scale / time frames / stocks / futures etc.

      For now the blog is great, and it’s fantastic hearing that “maybe I’m doing some good”!

      Thanks for the shot in the arm – lets keep at it.

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