DISCLAIMER: The following is not a recommendation to buy, sell or hold any financial instrument.
Short term, I'd expect people who chased this to get annihilated. This thing is a blood sport. Look for a shakeout period. The goal of the big money players is to accumulate as many long contracts as they can, at the lowest price. The easiest way to accomplish this would be to try to rattle the small time speculators out of their long positions, maybe even convince them to short. Prices will fall. Weak longs will get destroyed. The big fish will be accumulating as the panicked longs get out or reverse short. After a sufficient number of decapitations have occurred (the technical term for this is 'consolidation'), the thing will probably gap up to new highs.
And now, dear readers, it's story time on Cryptogon:TR
tried to devise a "black box" system that scanned the market, looking for moves like this. I understood technical analysis. TR was doing the programming. TR named the system, "The Magic Mystery Dot" because Trade Station would indicate the trigger by placing a dot on the chart when it occurred. Why am I still asking for donations on Cryptogon if we had the Magic Mystery Dot to do our bidding? Key word: Mystery
It didn't work. Not really. We were never able to quantify the drawdown period that usually occurs after the new high (we watched multiple periods) on momentum. We tried to devise a strategy for taking a long position at some point after this move was in. Not chasing it, mind you, but waiting for the inevitable shakeout to occur, and then getting in long. It was impossible for us to determine the extent of the shakeout/drawdown, but, I'll be damned if the thing wouldn't almost always work out.... eventually. The problem was with enduring the terrifying drawdown.
One time, we got a Magic Mystery Dot signal. I waited for the drawdown. Minutes passed. Yep. There's the drawdown. I bought the thing. Minutes passed.
Gap down. Block sales. A long red candle formed on my 1-minute chart. A red (down) volume bar grew ominously.
I'm an experienced trader. Sh*t happens. No problem. Get out.
But not this time.
This was a Magic Mystery Dot move.
My heart started beating irregularly. My pupils dilated. I started taking deep, panicked breaths. I grabbed hold of the desk to steady my shaking hands...
Remember that scene in Fight Club when Ed Norton gets the acid poured on his hand and he goes to his happy place? I closed my eyes, clasped my hands behind my head and leaned back in the chair. There were green rolling hills, a lake, singing birds. A little voice inside my head said, "Have faith in the Magic Mystery Dot."
Some number of seconds---maybe a couple of minutes---passed. When I opened my eyes again, it was gapping up! Up. Up. Up. Volume pouring on.
I managed to steady my hands long enough to manipulate the mouse and key-in the order. I read the sell order out to myself and pulled the trigger. When it was over, I was up about $500. I calculated the potential loss during the drawdown. It could have been as bad as $1000, if I had panicked and sold.
I didn't feel like I'd actually made the money. Have you ever narrowly avoided a terrible car crash? That's how I felt. TR wondered if my life flashed in front of my eyes. By luck, or the sheer grace of the Demiurge
, I emerged, unharmed.
I didn't trade the Magic Mystery Dot signal again, but TR and I both watched it "work" a few more times.
We were poor, and the tools
were very expensive. We tried all kinds of things, not just the MMD. We couldn't find anything that worked, but I continue to wonder if we could have figured it out, you know, given enough time with the tools and someone sliding the food and coffee under the door. We weren't trying to get rich. We just wanted to escape the clutches of the PHB
We knew that black box systems were real. Any market observer can see institutional black box trading ("program trading" in polite circles) all the time. It accounts for nearly 55% of the volume on the NYSE
. The trick is to make money off of it, not sit there pointing at the screen, shaking your head, after the fact. Like Icarus
, TR and I thought, "We can we have God-like powers." Why couldn't a couple of guys in wrinkled t-shirts and jeans slap Goldman Sachs around?
The results were predictable... Our glue and feathers didn't hold:Oil prices surged to a record near $58 a barrel on Friday, powered by a forecast the market could spike above $100 due to robust global demand and tight spare capacity.
Prices have climbed around 30 percent this year, with big-money speculative funds buying heavily on signs that rapid demand growth in Asia's emerging economies and the United States would strain world supply.
U.S. light crude (CLc1) rose $2.40 to $57.70 a barrel, breaking the previous peak of $57.60 hit March 17. London's Brent crude (LCOc1) climbed $2.22 to $56.51.
U.S. gasoline futures (HUc1) for May hit a record $1.7360 a gallon on worries that a national stockpile surplus could dwindle ahead of driving season, while heating oil futures struck a peak of $1.6750 a gallon.
Top energy derivatives trader Goldman Sachs (GS) said in a report on Thursday the oil markets might have entered a "super-spike" period, which could eventually drive prices toward $105.