OIL: Isn’t It Priced In?

by Larry Levin


Today was humming along just fine and dandy (rallying to new intra-day highs despite bad earnings) when traders looked at the price of oil. It was up again, this time just pennies shy of $120-barrel. It was at this time the markets fell.

But isn't oil "priced in" as the experts say on TV? The experts said it was priced in all the way up, and yet it is never priced high enough: the oil market keeps trending higher. Since it was priced in at $90-barrel, and $100, and no big deal at $115, one must wonder - at what level ISN'T it “priced in?" After all, it's almost a daily occurrence where oil trades at a price never before seen in human history...but it's "priced in." Said another way, when will oil be high enough that it can no longer be ignored?

Perhaps the answer came today when oil almost traded $120-barrel. The Fed meets next week and if it doesn't slash interest rates again, I believe that will be a sign the members are through allowing the US dollar to devalue, which is driving up the price of oil. That will be a sign the Fed wants to defend the dollar, bring down foreign currencies, and bring down commodity prices - especially oil.

That could also be a sign that the Fed believes it has a handle of the credit crisis. However, that will also be a sign the bull market (bubble) in government bonds and low interest are over so be careful what you wish for...it just might come true.

Real Time Trading Signals*for

Trade Date: 4/22/08

E-Mini S&P Trades*
(before fees and commissions):


1) PP buy @ 8:35am at 1382.25 = b/e (1 lot)

2) Engf sell @ 10:05am at 1382.00 = +1.25 (1 lot)

3) OTF sell @ 10:45am at 1383.25 = +6.25 (1 lot)

4) OTF sell @ 12:20pm at 1374.50 = b/e (1 lot)

5) OTF buy @ 1:40pm at 1374.00 = -1.75 & -1.75

6) FT sell @ 2:05pm at 1373.50 = -2.00 (1 lot)

7) Algorithm trades (5)…combined total...+4.25

E-Mini Russell Trades*
(before fees and commissions):

1) Sell @ 9:40am at 707.5 = -.8 (1 lot)

2) Buy @ 10:06am at 707.4 = b/e (1 lot)

3) Sell @ 2:04pm at 699.1 = -.7 & -.7...$220


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