CLN12 - Update for May 25th, 2012

Price analysis for the week of May 25th, 2012:

(updated Tuesday, May 29th, 2012)

Market Overview: The old cliche of 'Sell in May and walk away' seems to be playing itself out rather 'normally' this year. When it comes to energy, the seasonal trade usually closes into the Memorial day long weekend at the end of May. In simplest terms, refiners sell unleaded gas to wholesalers (from February to May) in anticipation of the summer driving season. Once the official start to the summer driving season arrives (usually memorial day long weekend) wholesalers have all the unleaded gas they need to meet normal seasonal driving demand. As a result, a small vacuum develops every year around this time when buyers are done and sellers seek price to liquidate. This year is no different.

Trading Strategy (1 week): We have officially hit our target zone for this correction. The target zone is based on the 1 year and 2 year 50% levels and currently sits between $89.445 and $92.75. It should not surprise us then to see that the market has basically consolidated around these levels for the past few trading sessions. Indeed, into this US holiday session, price was able to get back into the $92.00 area but has subsequently fallen back below the significant 91.52-.54 level. Considering the fact that the daily 50% level currently sits just above $100/barrel, there is substantial upside risk at the moment. I shall be looking for a quick rally back into resistance (around $100/barrel) over the coming weeks as I feel a 'dead-cat-bounce' is long overdue. Having said that, we have yet to officially bottom so as long as we keep making lower highs and lower lows, I will look for short side scalping opportunities...

That's all for this post,
Brian Beamish FCSI
The Canadian Rational Investor
the_rational_investor@yahoo.com
http://www.therationalinvestor.ca 
http://crisdaytrading.blogspot.ca/