Will oil ever take a breather and have a downward swing?  Or more severe, can oil find a top and fall from current levels drastically?  And how does that impact the rest of the trading universe?

I’d like to think that when I drive to a restaurant, the gas will cost less than the food.  And yes, that’s hyperbole, but it’s also frustrating for many that this comes to mind.  But that hyperbole shares an interesting view on markets for many consumers right now.

In any case, last week, I spoke about PBR being a potentially explosive trade setup due to the move in oil.  Let’s see how that’s performing:

Up a little over 3% isn’t bad, but it’s not the explosive move I was targeting.  At the end of the day, a win’s a win, though.  And oil is still rising.

When you know these key setups, spotting the lucrative Outlier trades gets crazy easy. Click here for your Outlier Roadmap.

So, if I think oil is still rising (let’s look at USO in a moment), what’s my next move?  Spoiler alert, it could be another commodity.  First, that USO chart:

As you can see, USO is spiking to new highs AGAIN.  But it’s slowing down.  It really seems like people are getting tired of buying into this move.  It’s an odd thought, but we must always remember that oil prices aren’t purely driven by gas demand, they’re also driven by speculators and traders looking to make a quick buck.  When I was an options market maker, I was absolutely thrilled to make a quick buck off a trader looking to buy an explosive price move when the move was over.  So, what happens next?

Well, if oil comes back from highs, perhaps oil stocks will fall.  But, if someone’s looking to trade the next leg of the great commodities boom, I can see a reason to buy into precious metals.  That’s where our friend Silver kicks it into gear:

SLV, the ETF that represents silver, is still very deflated relative to oil.  But it tends to have a sort of combined correlation to gold and oil – and that means that even when gold is lagging (due to interest rate concerns), silver can have a bullish move!  Why not look for an opportunity there?

There are many ways to play the upward move in oil, from oil exploration companies to silver, and in the investing universe, it’s important to invest intelligently with options to define risk and add leverage when you’re right!

So please, go to http://optionhotline.com to review how I traditionally apply technical signals, volatility analysis, and probability analysis to my options trades.  As always, if you have any questions, never hesitate to reach out.

Keith Harwood