Uranium is a classic example of over extended moves. The fundamentals are very sound for this metal. Nuclear is the silver bullet for the energy problems facing many developing countries. Yet the price has gone from 140 to 70. Too much too fast!
This is my concern for oil as well. Severe corrections do occur in bull markets. This does not mean the trend has changed but that the weak positions are shaken out. Using Calendar or Diagonal spreads can usually weather the storm of these severe corrections. This is not to say that you simply take a position because the overall trend is bullish, but that you take a little time to get better entry points. After all, we don't want to buy at the high and wait several months to get back to our original cost.
Pull back in the oil is coming. When it does, it should make for a nice entry point. Until then, you are just chasing the price.
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2 comments:
Dell, Is gold just taking a breather? Course you know me. I have one straight long position.
Debbie
We should see much sideways movements in many natural resources. Nothing goes straight up. The "breathers" and corrections are opportunities to get more positions. My fear is Oil the next one to correct hard. I have XLE position way back at 69 long and 71 short. So I am waiting for the coming correction to get more. Some times these set backs can be for many months. This can be trying I know.
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