March Crude Oil is up $1.21 per barrel at $81.05 this morning as I write. The included chart shows that crude oil has been slowly chopping lower in price after multiple tests at the contract highs in the $82.00 to $83.00 area. After a spike down on Friday to below $75.00, March Crude Oil has managed to bounce right back into the recent trading range once again. The major resistance is in the $82.00 to $83.00 area. The directional movement indicators are bearish but narrowing, and the ADX line is meandering sideways. For now, I see this as just one more of many previous rally tests back towards the highs with the expectation of another price failure. A close out over the contract highs at $83.60 would be very bullish, though. This latest rally over the past 24 hours has to do with the Iranians capturing a British sailing boat that apparently veered into Iranian waters while racing towards Dubai. This is on top of news lately that Iran does not plan on cooperating with the UN on its nuclear ambitions. So you can imagine all the military scenarios that some speculators want to conjure up. In my opinion, it would be an extremely difficult task for Israel to destroy Iranian nuclear capabilities by itself when, theoretically, these facilities are buried deep inside of mountains. It would almost have to be an inside job. At least one other Arab country in the region wants to know why Iran should end its nuclear ambitions when Israel already has nuclear capabilities and shows no signs of ending its own nuclear development. Who knows what will eventually happen, but I just wanted to point out how difficult it will be to get Iran to stop developing its nuclear capabilities without international help.
Followers of this letter should have the following positions:
Followers should also be long one March Crude Oil ($62.00 strike) put option from $1.51.
Short 2 March Crude Oil ($57.00 strike) put options from 83 cents each.
March Crude Oil options expire in 78 days.
David Hall
The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options can be substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.
This newsletter is not intended for dissemination to the public without prior approval from David Hall.
