This type of run simply looks overextended and toppy to me - I believe sooner rather than later (probably within a week or two) we are going to see a sharp reversal in oil to the downside. And it will take the commodities with it. Things have now moved to purely speculative mode - who else is left to buy and who is not on this train? I doubt very many....
I am going to buy Ultrashort Oil & Gas (DUG) as a "trade", not investment. This ETF has destroyed so many people but when it reverses I believe it will be powerful (this does not short oil directly but shorts a whole bunch of exploration companies) And yes, I am still a huge bull for the long term, but nothing straight up (or down). Parabolic moves get me thinking in a contrary nature. We appear to be nearing that stage, and I believe the the risk/reward is in my favor.
I am going to buy here in the $25.90s and see if we can sell it for $30+ within a month (that would be a nice 15%). Heck this ETF was trading there last week, so we might get it even quicker.
Well, we are now here at $30 (15% gain) in exactly 2 weeks; so this is an excellent trade especially considering when I bought it we were in super hype mode and people who bought this instrument the previous few weeks were simply being railroaded. I was fortunate to buy it on the day it bottomed; the only day it traded below $26. Recall I mentioned this was a "trade", not an investment or core holding. I am not going to sell it off here because of the market conditions and propensity for a bit more of a gain (plus it acts as a hedge against my long commodity positions) but I'll begin to bleed off this position over the coming week or two I believe... I'd be thrilled with $31-$32 in that time frame, considering my entry point and how quickly the gains have been achieved.
Long Ultrashort Oil & Gas in fund; no personal position
