Alaron Energy Comment

CHICAGO - Aug 15/08 - SNS -- Following is the energy futures comment from Alaron Trading Corp.

Who's afraid of the big bad bear? Sometimes it seems  that end of a bull market in commodities comes like a thief in the night and sometimes they end even more unexpectedly. Yet sometimes we should be a bit more prepared when the great proverbial bull decides to change directions. As commodities made their historic run it was becoming clearer that this run on commodities was not being built on a solid foundation and was more like a house of straw. It was only a matter of time before the big bad wolf or big bad bear in this case would huff and puff and blow the house away. Of course in the world of bull markets we always get three little piggies or more that tend to get slaughtered when the market changes direction.

No I am not trying to tell you that I am holier than thou as I to have worn the piggy mantle in my starched white shirt. But what I am trying to say is that it is easy to get caught up in the excitement and forget that in commodities at the end of the day this is a profit taking business.  

In fact many who have traded commodities can understand that when you are right the markets and you are on top of the world it is very hard to say when enough is enough. Why does it happen? We get caught up in being right the fundamentals of the market but we have a hard time trying to put into perspective what that means for price. When is high too high and when has price exceeded the level or got ahead of its self.  We give back profits by being pigheaded and not realizing that even in the best bull markets there are corrections along the way. We all get more caught being right the fundamentals as opposed to making money. Sometimes greed exceeded reason.

 The surging bull market in commodities that was that spent the year on the charge is now in the process of giving back a large portion of their gains. At the same time many traders that had fortunes made are also giving them back. The Key is why have the fortunes changed so quickly.

Over the last few years to me it was clear while oil was driven by strong supply versus demand fundamentals but this year it was driven by fear. People bought oil as a hedge against the dollar and a hedge against risk.

 Yet many thought it was all about China demand and peak oil. They followed the wrong fundamentals and were fooled into thinking that the run was all about peak oil. Of course it did not matter whether they were following the right fundamentals or not, if you were bullish more than likely made money. Of course by following the wrong fundamentals might be fooled into following the wrong fundamentals.

But now the risk play is coming off. Demand destruction is more and more obvious. We have the dollar revering and the rest of the world currencies coming back to earth. OPEC is warning of a supply glut as demand falls into a deep rut.

It looks like oil is headed back to double digits. Also it is time for you to sign for your free trail of Alaronenergies and your copy of the Phil Flynn Energy Blast! All you have to do is call 800-935-6487 or email me at  pflynn@alaron.com also it is time for you to check out the Fox Business Network.

Short September Crude from apprx 12570 stop to 11900!

Sell September Heating oil 33000 stop 34100

Sell September RBOB at 3100 stop 31300

Bought   September Natural gas apprx 830 stopped apprx 810

Buy Sept natural gas at 810 stop 780

Phil Flynn

Alaron Research Team

800.563.9510

pflynn@alaron.com

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