As Frank Sinatra would often sing, “…how high the sky”, we ask about the price of crude oil today. After hitting a three year high of $64.77 yesterday it is breaking lower and therefore presents a good trading opportunity to sell it short. This is however hardly a long term recommendation as the price of the commodity visible on the daily chart is clearly up. Remember, in the capital markets the tendency for prices to trend, which means their natural inclination to continue going in the direction that they are going is well founded, documented and understood. This is not to say that the trend always continues or that all trends have specific lengths of time. No. Let’s not get carried away to trader fantasy land. Rather, the herd instinct is wired into humans as well as birds flocking, livestock on the hoof or fish schooling. The herd instinct is arguably the most important psychological characteristic of capital markets. It must be understood and mastered to capitalize and maximize profits when trading. It is the subject of a longer exposition that will be presented here so suffice to say that the persistence of price to continue in a direction is often times a good position to stake out when trading. That the oil price does so only reinforces the point because, fundamentally, meaning the factors present in a market for a good (fundamentals), as opposed to the technicalities of the movement of its price (techincals) overall demand for crude is and has been on the decline for quite some time. Electric cars and more efficient transport engine technology assure this. Yet in short spans of time, days or weeks, within the longer trend there are reversals of that longer trend, called corrections, where you take the opposite direction from the long term prevailing trend and make money on “the reversal”. This is such a time in the oil patch. While the OPEC production ceiling has had some effect that drove and perhaps will continue to drive prices up, we are in a correction that will drive prices down for a bit of time. Maybe a week, maybe to return to its long term decline. Currently, Oil DOWN.