Trading Oil? Here's How We see the "Trade"

Oil, and commodities in general, remain in an intermediate down "Trend". That doesn't mean you can't making money on the immediate "Trade" using an upside bias. Below is how our models flush out in terms of trading oil directionally. We'd be a better buyer under the $54/barrel line and a seller on rallies to the $60 level.

The US$ is starting to lose its upward momentum. As we get closer to another free money rate cut by the US Federal reserve in December, we are getting interested in getting long some commodity exposure (US$ down, CRB up = “Trade”). Currently, we have zero commodity exposure in the 'Hedgeye Asset Allocation' model, and that's been a good thing for performance over the course of the last few weeks. Look for that to change if we get our price in oil.

KM