Crude Oil has increased sharply since the US Presidential Election, rising about 58% since the low on 11/02/20. However, on Friday we saw a close about 4% from the recent high. So, are the Bears in control now or will the Bulls take control and push the market higher? Will Crude Oil prices rise? Let’s look at the historical sentiment data and analyze how price responded in similar situations.

Here are the inputs we used when analyzing the sentiment data:

  • Crude Oil sentiment = between 50-70% Bulls
  • Seven-day sentiment change in Crude Oil = Decrease between 13%-17% Bulls
  • One-day price change in Crude Oil futures = Decrease between 1.5-2.5%

Since 2006, there have only been ten other times where we had a similar price/sentiment setup. Those dates were: 04/09/07, 07/29/08, 07/06/09, 09/24/09, 11/17/10, 01/06/11, 02/20/13, 05/26/15, 01/10/17, and 07/13/20. Looking at those dates, one can see Crude Oil futures put in a short-term bottom and bounced for a quick rise above the previous close.

CL 20110106

The Setup

Here’s how we’re placing our trade:

  • Place a DAY Buy Limit order for $CL_F (Mar) at 52.00 (half position)
  • Place a GTC Buy Limit order for $CL_F (Mar) at 51.45 (half position)
  • Place a GTC Sell Stop order for $CL_F (Mar) at 50.75 (full position)
  • Close entire position on any $CL_F c(Mar) close above 53.16
CL 20210124

CONVICTION. EXECUTION. DISCIPLINE.

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