Oil is now down -66% in about 5 months, and shed -12% last week. The last time OPEC met together they cut output and nothing happened! Ooops. Their timing was horrible, as a sharply declining US stock market was signalling recession (which kills the price of oil). In their next meeting they will have to do something extraordinary, and all oil traders know that. The cartel meets again on 11/29 then 12/17. They probably won’t cut anything on 11/29, but the whole anticipation of it should call for some high surf advisory in the energy sectors.
Using the oil ETF as a benchmark, notice the volume pattern. (1) Stock falling on relative low volume, and (2) right now there is a lot of money on the “side”, so any news item can ignite a short cover rally.
It’s amazing to see how heavily short USO has been for the past 3 months, but it looks like there’s a reversal. The magnitude of the short selling is suspicious:
And here’s your tradable stocks. Again, we are buying these trashy stocks on the rumor, and selling on the news. This is an play on the anticipation that OPEC cuts production drastically and that the price of oil would squeeze up a little.
Again, I am overall bearish on the market, but that doesn’t excuse the fact that you should have a strategy to play counter-trend rallies. For example, if you are heavy short energy (the correct trade), then buying calls on USO here would be an excellent hedge. Right now the market is about timing; therefore, if the alarm does not set, do not wake up to trade these.
Gio
Ban wagon? Ive been a fan since Bird, The Chief, Walton, etc.
Its funny how you live in Hawaii (where there is no team) but somehow you are a Lakers fan… hmmmm, sounds very band wagon-ish to me.
The selling doesnt stop until the new year.
So sorry
MSFT I’m shorting MSFT at 20.0–I’ve been making a small fortune buying lots and lots of OTM calls and puts on MSFT—I like their $1 strikes–I may never go back to $5 strike stocks again—
Yeah, I like USO for some bullish action in the coming week.