Reply #16: Many commodities traders tried that already... [View All]

[Lucky Luciano]

...and they had their faces ripped off. In fact, during the week that oil hit $135, the open interest in front month oil contract decreased by 8.7%....that means as people were buying up the oil contracts, most of the buying was note done to open the contracts - it was done to close the contracts - ie they were shorts having their faces ripped off. Short squeezes can be extremely painful!

This bubble does not end until we have a day or two where oil is up $10+. That is when the short squeeze is simply beyond crazy...then Goldman Sachs will put out an analyst piece saying that oil is overvalued...you know...right when retail starts to lever up and finally get on the bandwagon....then oil spikes down and the retail traders who have no business being involved are forced to sell - accelerating the process. By now the institutions will have finally gotten their shorts lined up correctly and they will pound it down further...oil stocks have finally stopped being correlated to the price of oil in the last couple weeks...this tells me speculators are dominating the movements in oil.

Incidentally, I have a small wager with my coworker that oil will have a $10+ up move in the next year. He says no way...and he may be right....but I got decent odds for the bet!