Trailing Stop on Oil

After The Kelly Letter’s oil investment rose another 8% yesterday as Israel pressed its offensive in Gaza, and Russia further tightened gas supplies to Ukraine, I set a trailing stop this morning.

The position is up 69% since its Christmas Eve close, yet economic data continue pouring in negative, reinforcing my view explained to subscribers on Sunday that slackening demand will probably send oil prices down again before they embark on a sustained move higher for the medium and long terms.

Here in Japan, there’s near-panic on the news that Toyota will be shutting down all 12 of its Japan plants for 11 days over February and March. The last time it shuttered all of its Japan plants was in August 1993, when the rising yen forced the company’s hand, but that was for only a single day. Last month, Toyota’s U.S. sales fell 37%, even more than Ford’s 32% drop and GM’s 31%.

Amid that kind of demand disappearance, a 69% price gain in six trading sessions has gift written all over it.

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