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Home / Futures Blog / Beyond the “Spotlight”: Crude Oil and Unleaded Gasoline, 05/28/2013

Beyond the “Spotlight”: Crude Oil and Unleaded Gasoline, 05/28/2013

May 28, 2013 by Don DeBartolo

For the Week of May 28, 2013

The Trade Spotlight advisory service applies the GBE trading methodology (buying or selling commodity contracts based on breakouts of chart formations and technical indicators) to identify one to two trade setups per week.

Highlighting This Week’s Potential Breakouts:

Let’s take a look at two energy market sector markets as we enter the “Summer Driving Season”.

July 2013 Crude Oil

Based on Cash charts, the Crude Oil contract tends to sharply drop in June, slightly retrace in July, and gradually sell-off through the remainder of the year. Even though this data was tracked over a twenty-five year period, the contract might not always follow this pattern due to fundamental and technical reasons. The July 2013 chart appears to have found resistance along an upper trend line and technically setup to sell-off. This falls right in line with the Cash chart.

The touches (or near touches) on the upper trend line are 99.77 (2/13/13), 98.22 (4/01/13), 97.38 (5/06/13), and 97.35 (5/20/13). The Trend Seeker (a US Chart Company tool to help identify market trend) is Up, but with a Weak ranking. The MACD indicator is already bearish and above the baseline. The Stochastic indicator lines are converging, setting up to crossover bearish and above the “over sold” line. In a wild trading session on Thursday (5/23/13), the market broke below the low of 92.40 (5/15/13) but closed 2.04 points higher. A break below the 90.32 low (5/01/13) perhaps will provide a change in the Trend Seeker and sufficient confirmation to the downside. An initial downside target is the low of 86.16 (4/18/13).

july-crude-oil

July 2013 Unleaded Gasoline

Based on Cash charts, the Unleaded Gasoline contract tends to top out in the Spring and sell-off throughout out the Summer months. Too bad gasoline prices at the pump don’t follow that model, especially here in Chicago.

energy-eia

Source: http://www.eia.gov/todayinenergy/detail.cfm?id=11411

The July 2013 RBOB contract is trading along a lower trend line. There are touches on the trend line at 2.6750 (5/01/13), 2.7568 (5/15/13), 2.7792 (5/23/13), and 2.7912 (5/24/13). The Trend Seeker (a US Chart Company tool to help identify market trend) is Down and Strong. The MACD, a trend indicator, is rising but remains below the baseline. The Stochastic indicator is bearish near the middle of 80/20 scale. There is Momentum in this market as the ADX indicator reads 23.12. A close below the upward sloping trend line will trigger a short entry opportunity. Potential stop losses can go above recent resistance, the high of 2.9054 (5/17/13). A potential downside target is the recent contract low of 2.6771 (4/18/13).

july-gas

Risk Disclosure

STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

Filed Under: Trade Spotlight

About Don DeBartolo

Don C. DeBartolo is a Series 3 licensed broker registered with the National Futures Association (NFA). As a former arbitrage clerk in the S&P 500 futures pit at the Chicago Mercantile Exchange (CME), Don has floor trading experience. Taking his trade execution expertise and ability to navigate a fast-paced environment, Don transitioned to the brokerage side of the business. Since 2005, he has worked at Daniels Trading, a brokerage firm in the heart of the financial district in Chicago. His responsibilities as a broker include providing market analysis, trade execution, and money management to his clients around the world. In March 2010, he developed a formal trade advisory for clients of the firm seeking specific trade recommendations and subsequent risk management.

Due to his widespread proficiency and experience with the futures and commodity options markets, he is able to offer his clients timely insight, specialized trade recommendations, and educational information through various videos and writings.

Studying at Loyola University Chicago, Don discovered the international sport of rugby. Still today, he plays for the Chicago Griffins, a member of the highest league of rugby competition in the United States. Skill and discipline are two traits that carry over from the pitch to the trading screens.

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Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

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