Wednesday, May 21, 2008

Never forget that they are still stocks

Unless you were at the club all day playing golf you know that crude oil was up over three bucks today and that is on top of the 17 it was up during May alone. You would expect oil stocks to do quite well and indeed in the morning they were up.

But by the afternoon, when it became apparent that the stock selloff was going to stick the XOI index closed down a quarter percent Here's some more fun:

The USO oil ETF was up 3.8% (OMG that is huge)
The DUG ultrashort energy sector ETF - which was down huge in the morning - closed up 2.6%!

Zoiks! Talk about playing both sides of the fence!

Stocks tend to lead their related commodities - I'm just sayin'

6 comments:

Doug said...

funny you bring up DUG, i've had it for a while now, been getting beat up pretty bad. i bought a few weeks ago and had a nice profit going for a day or two, then i let it go against me like a moron and continue to slide. i can't believe the run that DIG and the energy sector has made....just crazy!
doug

Herman said...

It was in a descending wedge an on 5/16 it fell below support drawn from 7/20 through Christmas time. So I am skeptical about any serious turnaround.

Quick Takes Pro said...

Doug digs DUG, huh?

Stops - mental or hard - are crucial to money management and living to fight again another day.

I was stopped out of LDK Tuesday and missed a huge rally but it is better to miss a few winners than ride losers to the breaking point. Just ask Enron shareholders.

Quick Takes Pro said...

Herman, my premise in last week's column was that correction is necessary here. I do think oil is going higher but now that everyone assume it is heading to 150 it is time to spank the masses.

Herman said...

I'm guessing DUG won't rise above $29.50. That will fill the gap (hourly chart) and hit a fibonacci line. It also "kisses" the old descending wedge support line (daily chart) from below.

Doug said...

herman, if it does get to that I would be fine with dumping it. I picked it up for 31.50(350 shares), so after the ride down I would be glad to get out for a dollar loss. I have been walking around angry over the gas prices which also causes people to be wildly bullish on energy. Between OPEC bending us over and congress(democratic controlled) not wanting to drill for oil in our own country, I have plenty of people/speculators to be upset with. It's foolish and childish because I need to take full responsibility for my own trading mistakes.
thanks guys for the input.
doug