Quote:
Originally Posted by heep223
I don't really disagree with anything you said here, though I would think most long term shorts have already locked in gains and if your thesis of a short squeeze is correct, it's because they're getting margin called after getting their faces ripped off in the last 2 weeks like ^ just posted. Not because they're locking in gains.
I'd also mention that we have already re-tested the mid-20s lows and bounced hard from there to form a pretty textbook "W" double bottom. Previously every re-test of the lows failed so there is a real distinct change in behaviour here. But you're right we could test mid 20s again to form a triple bottom, I personally think that's pretty unlikely and the lows are in.
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My comment was oversimplified for sure. Probably the majority of short covering or margin calls occurred from $29 to $32. Some of those same traders could be long right now in addition to others. Most of these contracts aren't held in either direction for very long. Oil is probably range bound $30 to $40 until fundamentals suggest a break out in either direction, ie. big draws on inventory or production declines or conversely a weakening of demand or slowing global economies. Very big resistance to overtake at $40 range, if it can break $40 its probably going to $45 in hurry. Problem longs have in the near term is there is no change in fundamentals, just less pessimism and the trade probably got too crowded.