May 2008 NYSE: Market recovery in progress, Oil record High! Stocks grind upwards…

First of all, I apologize for the disappearance the past Month and a half. The Market, University, side ventures and exams took its toll and i was pressed for time. Well now that things have settled down, its back to business and hopefully this time ill try to post daily updates and make some time for the blog

Today apart from the open it was a relatively uneventful day with major moves on Sprint (S) and of course Yahoo (YHOO, NASDAQ) due to news. Another interesting stock in play was CFC. Big sizes and level breaking allowed traders with decent share sizes (10,000+) to make some fast money with quick entries and exit. Major plays for today during the open included COP (Conoco-Phillips) which was a good short at $87.99. I was hoping for a big position on this but got filled much lower than expected. Long Story short the stock tanked to around $87.50 in about 15 minutes and it was on heck of a position. To put it in perspective, taking lets say even 2000 shares short at $87.99 and exiting at around $87.59 would have made around $800 in 10 minutes or less. NewMont Mining (NEM) was another interesting play, however it failed to break the $45.40 level for much of the day. The best moves were of course YAHOO (YHOO) and potentially Sprint (S) and just a look at the chart and volume is enough evidence.

The S&P futures remained in their 1,404 – 14,16 range but closed lower than Friday (1,413). The fall in the futures and the brakes in the market was partly due to the Yahoo, Microsoft dealing falling apart; partly due to the weakening US dollar and rumors on certain financials (*Cough* CFC). I expect the market to continue its grind upwards and hopefully as i stated in my previous blog (when the market was on a free fall downwards) that the Us economy should start to rebound significantly by 2009 unless there are other hidden surprises in store for us. Oil prices should also start to decrease as the dollar rises again.

Before closing, I would like to review some of my past posts to see how far I have grown into understanding some of the market fundamentals. My first and biggest call was to buy Citigroup at around $20-$24 range for the long term. The Stock actually went all the way to $18 before rebounding back to its current $25-$27 range. I still think for longer term investors Citigroup remains a promising investment and should expect to see the company re-surging in 2009.

Another question that seems to be on people’s mind is the rising price of oil! Why is this happening and are we running out of oil??? My simple and reasonable understanding is NO. The current rise in crude oil prices has more to do with the weakening dollar than demand and supply. As i stated before as long the oil stays above $50, huge reserves such as Alberta’s Oil sands (worlds biggest) and Venezuela’s offshore deposits are economically viable. OPEC is also pumping out more oil but are also aware that the issue is not of lack of supply but purely speculation and protection against the weakening dollar. The US dollar is currently the major currency used throughout the world. Several countries including oil producing ones in the Middle East are pegged to the dollar. When the dollar weakens, investor worry about their declining value and in order to protect its value (also from future inflation) they start investing in commodities instead. As a result we are seeing record rises in the prices of commodities such as oil, gold, copper and other resources etc. Hopefully by 2009-2010 the US economy should settle down, restore investor confidence and the prices of commodities as a result may start to see a decline. The rise in oil prices unfortunately has an impact on more than just our fuel pumps and the rise in world food prices resulting in major food crises around the world is one example of its effect on our society….

Any thoughts or comments are most welcome. If by chance there are any oil traders reading this, I am curious to know how you guys are viewing this. Cheers

Danial Jameel – www.daytraderlog.com