Petricca’s Pick 12/13/2023

GASOLINE (RBOB) FUTURES UPDATE

Gasoline futures are now trading close to short-term support where partial liquidation is now recommended. Those of you that have multiple SHORT gasoline positions that were established in the UPPER 25% of the Long-Term trading range $2.35/$2.37 should cover 50% of those positions.

 

Market is presently trading $2.02. This gasoline (RBOB) move is worth approximately $13,600.00 per 1 contract.

 

My Longer-Term objective is the lower 25% of the Long-Term trading range ($1.50 or lower).

 

 

 

Fundamentally speaking –

 

My letters have been consistent in terms of record oil production here in the U.S. Supply has been overwhelming and demand has been waning.

 

Professionals are now predicting gasoline prices could fall below $3.00 a gallon for holiday travelers. Merry Christmas everybody!

 

Last week’s data continues bearish as the Energy Information Administration show gasoline product supplied, a proxy for demand, is up to 8.488 million barrels a day from 8.206 million barrels a day the week earlier, while weekly supplies climbed by 5.4 million barrels a day to 223.6 million barrels.

 

Gasoline supplies on the Gulf Coast started the month of December with the most gasoline in record, said Cinquegrana. “Refiners in that part of the world will have to do whatever they can to push out gasoline and not create a glut.”

 

My vision for this investment opportunity was clear back in August…

 

My August 31^st post read as follows….

 

“Seasonal tendencies for gasoline futures normally reach their lower levels in December and peak late summer as driving season ends.”

 

“ENERGY COMPLEX COLLAPSE IMMINENT DUE TO THE EV EVELOUTION”

 

“The American Petroleum Institute continues to report increases in gasoline supplies.”

 

As you can see from the chart above, there was in fact a drawdown regarding my gasoline position. The market rallied, after positions were established. After a double top occurred the market corrected sharply.

 

My letters talk a lot about Money Management Strategies. There is no question there are situations when market volatility can and will exterminate the weak, underfunded, overloaded, emotional short-term trader that could be “right the market” Longer-Term, but lacking regarding Money Management implementation.

 

My Strategies are specific…

 

Only three contracts (depending on margin requirements) per $10,000.00 is recommended. Because of high volatility and margin requirements, clients were only initiating 1 contract on this trade which was more than enough margin excess to withstand market volatility.

 

Commodity trading is hard…To alleviate the stress/emotional short-term gyrations that occur regularly, another approach should be considered.

 

Remember there are four important components regarding my strategies…

 

1. Positions are established only in the upper or lower 25% of the Long-Term trading range.
2. Positions are established only when my trend following methodology is up or down within that 25% parameter.
3. Positions are held until positions reach the opposite extreme high or low. (The upper or lower 25% of the Long-Term trading range).
4. Correct money management strategies must be implemented.

 

There is no question that more that 90% of commodity investors lose money…

 

And it’s true that my strategies also incur drawdowns…

 

But – What I offer is a way to be “in the market” when major commodity moves occur.

 

My strategies require one to maintain –

 

• Patience
• Commitment
• Vision
• Discipline

 

Those of you that have an interest in additional details regarding my strategies should call me personally. 312-690-7763.

Would love to hear from you.

 

In the meantime,

 

Have a great year trading!

 

Best

Frank

Questions? Ask Frank Petricca today at 312-690-7763.