Heating Oil has been trading in a sideways market for the last few weeks. The last few days have been negative and brought the market to the low end of the trading zone due to the nervousness surrounding the results of the Fed's bank stress test and negative earnings news from large companies. I look for support to develop in the zone between the 50 day moving average of 1.34 to horizontal support at the 1.30 level in the June contract. This would be a good area for speculators to buy and for users (farmers) to lock in some of their Spring energy needs. I would look for resistance to develop in the 1.46 level and then at the 1.53 level. If you do buy in the support zone, risk 3 cents on the trade. If we get another round of negative news that drives the stock market lower, the Heat Oil could test the contract lows near 1.17.
Jim McCormick
Sr. Broker
Allendale, McHenry, IL
jmccormick@allendale-inc.com
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