Thursday, April 17, 2008

OIL topping?

Everybody has been watching Crude Oil prices to go up up and away day after day month after month...I, for one, not really a "commodities" guy, but I have been watching oil prices as well - it affects my well been, hits my pocketbook on multiple fronts - at the gas pump, in the supermarket and at a lot of other "hard to mentally connect with oil" places.

But yesterday I opened substantial DUG ( US Oil Trust UltraShort ETF ) position, kept it overnight and intend to continue to add to it after meaningful moves - up OR down.
The reason is pretty much the same as when I went long USO ( US OIL Trust Fund ETF ) Nov2006/Jan 2008 period - DUG had huge volume spike, over 200% of average last month volume which already was high enough to point to some kind of "panic selling/beginning of bottoming" phase.
It is hard to go against the herd - it might be as painful to stay in that trade as it was back in 2000 to stay short Tech - I will not know until later if "that was the right time".
It does seam to be illogical with anything related to Oil, especially OIH Oil and Gas services ETF setting "almost new high" just yesterday...

It might NOT be the bottom for DUG, it might be "just a temporary" bottom, but I think DUG has potential to go up to $36+ area.