Why I Won't Short Oil

I've been getting signals on the trade system, which is a long term trending system, price based.

Understand that oil and other commodities like metals, etc have an inverse relationship with the dollar. Forgetting the technicals for a moment-how can the dollar not be diluted with these massive budget deficits? They must print more money-period. The dollar has put in two bearflags and as with all continuation patterns, there's always the chance/opportunity for a bounce back up to resistance-that is what is happening in the dollar right now.

Here we see my stop (Trend Channel) in yellow and I've drawn trendlines at the stops that it is signaling, the dollar is still below that stop.



This chart is a little complicated to read-look at one indicator at a time. My 3C in orange has shown, despite higher prices, the indicator is not making higher highs, it is showing a little distribution in the dollar. The blue indicator is an underused-under appreciated indicator called ROC (Rate of Change) and it is a reliable momentum indicator-again, the dollar makes higher highs and the indicator fails to follow price. Finally in the lower window is long term TSV (Worden's proprietary Time-Segmented Volume) and you can see it has failed to do much at all. There's no long term accumulation behind this simple technical bounce-but oil has been punished badly for the recent move in the dollar.



Here we see the bearflag trendlines and my crossover system-the system has failed to register even 1 of the 3 triggers needed to validate a true crossover. This system performs much better than a simple crossover system which is plagued by false signals.



These are the bearflags and this is the pullback that I mentioned to resistance, which is the lower trendline.



Finally-look at the BIG picture, there's nothing hereto suggest a meaningful change in trend. Also-one of my little secrets-think for yourself. I say Wall Street is full of Sheep, Be the Wolf. Look at my settings for the MACD-not the 12/26/9 that everyone uses, where's the edge in looking at the same thing every other chart reader is looking at. I look at the longer term picture and try to avoid getting worked up about every market gyration.




The Blue channel you are looking at is the main component in my Trend System-two consecutive days under the channel produces a short signal like we see here on DBO, the indicator in the bottom is custom and it is my version of MACD. Note that the decline is seeing fading momentum in my indicator.



This is a 2-day chart of my Trend Indictor-why two days-because DBO is an Ultra-or double. Look at the incredible gains on the red colored short signal and decent gains on the blue long. You must remember, if you are on Wolf on Wall Street (email for two weeks free access to the trade signals) this is a long term trending system-it's not about 10% pops in two days which everyone is impressed by, it's about patience and huge gains over time. You'll also see currently, there is no short signal in DXO-it is still a trending long-despite the drawdown. The middle window is 3C-still above its moving average.




Here we are looking at new 50 bar highs and new 50 bar lows for the industry-still very bullish. The bottom red indicator is the symbol rank vs the industry group-still very bullish near the very top of the group.



This is the Elder Impulse system on a 5 day chart, there's nothing even remotely bearish here on DBO (Double Long Oil)



This is a Detrend Indicator showing a bullish positive divergence in DBO.



This is a 30 min chart of DBO with Demark buy and sell indications which have been very accurate-we have a buy signal now. RSI is turning up and Stochastics is turning up-again note the long settings I use even on Stochastics.



The next 3 chart are intraday 3C charts all showing a positive divergence-someone is accumulating at these lows.





This chart is showing a reversal pattern the last two days-some call it an inside day, but it's also known as a Harami in CandleStick charting and it is a reversal signal-I'm guessing tomorrow DBO is up. The last Harami was in mid April at the bottom of the decline.



Here's the same Crossover system we looked at on the dollar, except a two day chart for the Ultra-again, we are still in long mode.



This is the same chart just zoomed out-note the extreme gains captured using a system that is not plagued by false signals at every little bounce or decline-a great short was realized and a good long thus far.




These are the reasons I will not short oil at this time. It's one of my most difficult calls because it has the potential to be wrong big time, but I do think we are on the verge of a major bounce and will see the uptrend in il resume.

As for business-don't forget to check out Wolf on Wall Street, it is a private site by invitation only and is based solely on my trading system-the charts on the sidebar to the right show the results of backtesting the system. Email me for two weeks free access-right now I've extended that time because I want people to see what this system is capable of and we are close to that point.

As for all the indicators you saw that I have created-I'm an affiliate for Worden/TeleChart and StockFinder. If you use my links and tell them that you heard about them from Trade-Guild, you just email me and I'll set you up with any of the custom indicators you see hear-except the Trading System which we have bigger plans for as it is being audited right now.