Market unable to sustain rally

Whether we call it more of a range bound market or not, we have not been able to sustain a rally. The equity markets Wednesday were bearish following the news of President-elect Obama, and some negative earnings surprises. Energies did not respond well to apparently bullish inventory data, which tends to spell a potential for downside here overnight. However, we see a trading range forming with consumer hedgers increasingly locking in 2009 value when we reach the low 60s. That said, volatility remains remarkably strong overall. The best near term strategy is to roll crude spreads forward, avoiding too much long volatility. We continue to recommend long call spreads or long call 3-way strategies for consumers. Long inventory players would be better to opt for put spreads or longer dated (at least Jan) crude puts that are not subject to too much value erosion over the next week. Note that December American crude options expire on a Monday, which is bad for option owners.

New York 17h20