February RBOB futures appreciated 1.85% yesterday and have?gained?in the last three?sessions?after?finding?support?at the 50 day MA; the?green?line that acted as support as seen in the daily?chart.?Next?upside?resistance is seen at the 38.2% Fibonacci?level?at $2.73 and above?that?the?red?horizontal?line drawn on the chart coming in at $2.77 in?this?contract. I expect a?penetration? of?both?levels and a trade?back?to?levels?not seen?since?late August. Below you will also?see?a?weekly chart with two red?horizontal?lines. Taking a longer term viewpoint $2.50 appears to be the line in the sand?which?has?acted?as support for the last two?years. As for upside $3.10 is your?upper?band.?
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Energy futures picked up gains today likely?influenced by the fact that the Federal Reserve’s decision to?scale?back its key bond?purchasing?program…sending a signal for signs of economic growth and?potential?increasing demand for energy. If the Fed is willing to taper the?interpretation?from the market participants?today is there must be?stability?in the?economy?and economic growth is always?conducive?for?higher?demand.?
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Lets?strengthen?the case for higher gasoline prices:
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There is?generally?a rally in the gasoline futures market that?typically?begins in?November/December?after?prices?bottom. As an?aside?purchasing March RBOB futures on or near 12/10 and?holding?until on or near 1/30 has been a?profitable?trade 14 out of the last 15?years.?Past?performance?is not indicative of future results.?Additionally?not for the faint of heart as?this?could be a?bumpy ride. ?The current bull?market in the?stock?market may provide fuel and provide upward?momentum …remember?risk on. Gasoline demand?remains?unseasonably strong for this time?of?year.?
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Weekly RBOB:
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Daily RBOB:
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Trade ideas:
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- Buy dips in February RBOB futures that approach their 50 day MA with a stop under that pivot point, currently that level is $2.6450. Use $2.76 as your upside objective.?
- Buy a 6-10 cent bull call?spread?in?March. For?example?as of today’s settlement one could buy a $2.80/2.90?for?ball?park $1,250. This?represent?a $4,200 spread and has 69?days?until expiration.?
- Long?March?futures and sell 1:1 a $2.75 call.?This?would?give you a 7 1/2?cent cushion?or $3,150.?If futures close?under?the 50 day MA cut losses on the trade. Target $2.80/2.85 in the?next?30-45 days for an?exit.?
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Risk Disclaimer: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities and/ or financial products herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed to be accurate. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (?Forex?) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results. This report contains research as defined in applicable CFTC regulations. Both RCM Asset Management and the research analyst may have positions in the financial products discussed.
