I mostly chronicled this trade over at the Rambus forum this week but I thought I would show the before and after charts. The principle that drew me to this short sale earlier in the week was “Flat tops lead to big drops” As you can see this chart was simply crying out “short me”. I have always viewed the move up in oil recently as simply a hot air retracement of its previous decline. I felt the supply situation made this move unsustainable. The world is producing 1 M BBls more than it is consuming on a daily basis and storage is filling up. As one can see all the technical work had been done we were now just waiting for the move to start.

The first chart is where I posted my major short position was in place. The second is the classic fall out of the flat triangle.

I covered the trade yesterday mid-day as it had moved so far I felt it was likely to snap back some. When the futures remained down this morning I reentered the short this morning. I remain short over the weekend and do think price has further to fall.