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For: Monday 06-21-2010

Rising Wedge

The energies have put in an impressive rally off the spike low in mid May. This rally stalled out at the underside of longer term resistance that is the pivot low in early may and the double low in the middle of March. The rally is taking on the shape of an ascending wedge pattern. This is often times a terminal pattern and we would look to sell a violation or close below support.

Aggressive traders may opt to use futures. As always please consult your personal broker at Great Pacific Trading Company to see if this trade is suitable for your account.

Trade Recommendation: On a close below 7600 versus the August contract, this week, buy the 7300-6800 put spread and sell the 8000 call for a total debit of 50 points on a limit. Risk 100 points on the trade initially or a close above 7750 whichever comes first . (>$1000 not including commissions and fees), Look to take profits if futures trade to 7120.