This post was just published on ZYX Buy Change Alert and ZYX Short Sell Change Alert.
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Oil had fallen yesterday in Asia and Europe on the news that Russia would not collaborate with Saudi to bring higher oil prices. This morning traders in North America started buying, apparently oblivious to the big news over the weekend. Initial buying lead to short covering.
We told you in the morning capsule,
There is more short covering in oil but there is a high probability that short covering may have run its course.
Subsequent action in oil shows that our analysis was spot on. After trading as high as $45.86, oil dropped to $44.52. The oil would have easily gone under $44 if it were not for JPM updating oil demand numbers for 2015. The oil spiked to $46.41. That spike was buying by less informed traders. Smart Money sold into the strength and since then oil has pulled back to $45.38 as of this writing.
Those who follow the Intelligence from earlier posts have substantial profits in oil. Consider taking profits on one-quarter (1/4) of the position right here around $45.28. SCO eq is $88.02. USO eq is $14.85.
Consider taking profits on another 25% position if oil falls into the zone of $44.50 to $44.86. Consider stops on the remaining position in the zone of $46.76 to $47.32.
Targets for the remaining position later.
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