I assume that this trading is being done in accounts with no access to futures because that is the best route to do this. ETF’s obviously are next and then the third would be XOM. It is one of the most undervalued stocks in the Dow fundamentally and has held up on a relative strength basis much better than the price of crude itself. If the price were to rebound, XOM should continue to outperform the commodity itself.
I don’t understand this whole idea of the 2 X leverage routes that many people who are inexperienced seem to take. This doubles your risk, and they are also very illiquid the fills are terrible. Make sure if you play these sucker vehicles that you take the extra risk into account with your overall portfolio risk. I have been on record in here calling for $30 Oil and I still have not seen anything that makes me think we won’t reach that level, we were 33 and change earlier this am. We may not stop at 30, there are still billions of dollars of losing positions in hedge funds that have to be unwound. The dollar found major support yesterday at the .618 retracement to the years low which is why we have seen that huge rebound the last 2 days. I sent Rich an email telling him we should hold there 2 days ago. Alot of pros watch and play at these levels. We could really launch upward in the dollar from here, I am looking for a long entry pattern there right now. I have not found a causal relationship between crude and the dollar in my research. As a result I don’t think analysis of the dollar should play a role in whether you are bullish or bearish on Oil.
