Oil & Gas Charge Ahead While Gold Wavers
Jan 4, 2011
1. The former head of Shell Oil warns that oil could almost double in price, in a year. I brought oil to most of you as a screaming buy not only into the exact 2008 lows, but about 6 months ago in the $60-70 area.
2. I argued that the staleness and boredom of the sideways oil price action should not be taken for granted; oil should be accumulated.
3. Almost nobody listened. I gave up trying to convince you because I couldn’t think of a novel way to get the point across. Now price has skyrocketed to over $90. A move above the $147 highs (I think we take out $200 in this bull) could be catastrophic for the real net worth of the average citizen, despite the non-stop propaganda from the banksters and the govt (Gman).
4. According to these twin scumbags, raising the prices of your basic living expenses is great news for you, especially for widows and orphans. “Never mind that we just hit your purchasing power again. You are richer! Your ‘investments’ at the gas station, grocery, and pharmacy just went up in price again. Congratulations!”
-Gman and the banksters, Jan 4, 2011?
5. So, have you missed the oil play? Here are 3 charts that should answer that question. Click here now to view the recent Oil Range Chart. You don’t have to be exact when drawing HSR (horizontal support & resistance) lines, and in fact I would argue that being inexact will help you profit, because price rarely moves exactly as forecast or as “ordered” by technical analysis.
6. You can see that price has moved roughly between the red supply and blue demand lines. The black pyramid denotes a block of risk capital that is allocated in a pyramid formation in that range, buying more as price drops towards the blue line and feathered out as price rises towards the red line. You can see that price gyrated many times within the range. The trading strategy was highly profitable and part of the buys were core positions.
7. Here’s a look at the New Range Oil Chart. Notice the much bigger size of the range, which extends all the way to the all-time highs around $147. It is absolutely critical to understand that just because price has broken out upside to a new range, you have no guarantee that price will stay there. An upside breakout “commands” you to play the new zone, but not to move all trading capital to the new zone. Price could go back into the old zone, and often does, if only temporarily.
8. Given that the new range is huge, you have not missed out on anything except the smaller range we just exited. You should also understand that as price goes higher, the distance away from the price of zero increases, so by definition your paper money risk also increases.
9. Don’t end up like billions of public investors, who wait until price goes so high that they start to believe a drastic fall in price is “impossible”, and a “new era of endless free money” has arrived, and surge in to buy. Their waiting for price to rise higher before buying increases their risk drastically.
10. Here’s a 3rd look at the Oil Chart. Think back to 1999 when oil was $10 and supposedly headed to $5 because of a glut “destined to stay” for decades. Price could take out $147 on the upside and start a huge rise towards $200, $300, or higher. You need to coldly prepare now, for such an event.
11. Determine the amount of risk capital you are prepared to bring to such a scenario now, rather than committing “from the hip” after the fact.
12. Those 3 charts suddenly make all the “glut forever” natural gas bears look stupid. Will they look as stupid as the oil bears from 1999 (99% of the population) look today?
13. I don’t know the answer to that question, but I’m fairly confident that I’ve succeeded this morning in giving you a taste for the unbelievable upside that really exists in natgas because only a moron seriously believes oil is going to $147, $200, or $300 as the paper currencies implode, while natgas languishes anywhere near current prices.
14. The reward to risk ratios for natural gas vastly exceed those for oil, and they are great for oil. Natgas is much closer to zero in price, so risk is much lower. As oil surges, natgas will be sought after as a replacement for oil.
15. The natgas daily chart is shown here. Notice the mass numbers of buy signals on the oscillators beneath the price chart. The chart is exhibiting an up-sloping head and shoulders bottom pattern, which can portend an explosive up-move in price. Subscribers who bought natgas are going to make untold riches if you leave your core positions alone and make them sacred. Those positions were bought around the lows, which I have dubbed, “the great discomfort zone”.
16. Click here for the NatGas weekly chart. It is even more bullish than the very bullish daily chart! There is a down wedge on the weekly chart, and it just broke out upside! I’ve circled the breakout with a blue circle. Now, hone in on that daily chart again. What you have is a h&s bottom on the daily chart launching price up from a bull down wedge pattern on the weekly chart. The bottom line is: a natural gas super-move could be at hand. Are you prepared, what’s your bottom line?
17. I asked the world’s greatest juniors stock trader, GoldLion, to compile a “Seven Sisters” list of NatGas juniors, and he did. Those stocks look ultra-bullish, and I suggest you consider ruling them, as he is, with my pyramid generator, which buys weakness in a pyramid formation of risk capital allocation. My suggestion to you: throw the bears’ NatGas glut nonsense in the same garbage can that now houses a mountain of failed oil glut analysis on $5 oil from 1999. Thanks!
18. What of the ultimate investment, Sir Gold Bullion? Here’s an early morning look at the One Month Gold Chart.
19. I detailed the move over $1410 as opening the door to the 1410-1430 range play. Notice the gold-coloured pyramid’s base is below the 1410 support zone. Always place your lowest buys in a buy campaign below the point you know is rational. Make your charts answer to you, not you to your chart.
20. Today’s move down to $1407 has filled those buys in the 1430-1410 zone, and brought the bigger 1310-1370 range back into play. Note the gold pyramid shown in this 2nd look at the gold price. That’s in play now. Feather your risk capital into price, starting now, allocating ever-more capital into price down to approx $1360 or $1350, if it happens.
21. You can’t know how far price will descend towards the $1370 area. All you can do is be prepared to act.
22. The GDX chart seems to be hinting at further weakness. Here it is: GDX Volume Chart. The good news was that volume continued to drift off as price has lost upside momentum and drifted sideways for the past 2 months.
23. The bad news is that the burst of volume that just occurred was on a down day. I wouldn’t read too much into one day’s technical action. The holiday trading can distort volume patterns, but an argument can also be made by pure technicians that you should look only at volume itself, and whether low volume is caused by holiday trading or not, it must be looked at from a purely technical perspective.
24. I don’t see any weakness, if it happens, as bad news. I see it as monster good news. For you. You might get a chance to allocate more risk capital into gold stock. You get richer by owning more shares of gold stock, not just by increasing the dollars per share pricing!
Jan 4, 2011
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