this trade is a huge winner! as is bollings other commodity trades... buy nat gas vs sell crude.... corn long at $2.50, wheat long at $4.00, buy gold at 575... sell at $680...not sure what he uses but if you follow him, you make $..... thats why we blog, right OR maybe eagle just likes to see his words in print... ps: BTW he called some serious stocks as well .... FS, CXW, DLP, DE, PSA AIG, etc.....
We will have to see where this one goes. Demand is strong there is no doubt. But the question is when the market will react to it. I was just watching some TV from India and they were pushing some re-badged American SUV's. Time will tell. Akuma
First welcome to ET! I assume you are referring to this trade. 10-31-06 09:07 AM Going to cover GLD at $59.60 for a profit of $.40 or $40.00. Will keep the long position on USO. USO may not bottom till after the elections. I am long at $52.05 with a stop at $50.05. Oil is somewhat risky now as the trend is still down. Hoping to cover with a short profit. As an aside, Eric Bolling recommended the exact opposite trade yesterday. Buy GLD sell USO. Anyway, our money is as green as his. Only time will tell where oil will go. By the way someone mentioned on another board that he suspects that the Saudis may be flooding the market with oil to push prices down. This argument makes sense as even the average american citizen is doubtful about oil's amazing plunge. I know, I know supply vs demand, blah, blah, blah. Just a theory. This trade would have worked well as USO has fallen while GLD has rallied. Does he mention to exit yet? I think if you post a trade you should be somewhat specific as to exit. I do not follow the show; I would caution following anyone without a full plan ( entry, exit, target, stop etc). Currently bearish on USO, weather is a factor, lack of real OPEC cuts, huge build, etc. An equal case could be made fundamentally about being long Big Earl, black gold, Texas Tea. A bottom will appear at some point in the rear view mirror. As an aside the fund has raised a little under a billion so far and is an interesting vehicle to trade. Annualize your gas cost; for me $3,000 per year. Buy 60 shares at todays close $51.00 x 60 = $3,060 rnd. Now you are hedged to the upside. If oil goes to $120 and gas is x price you are loosely hedged!
USO closed over its 50 period EMA today. One of the posters in the energy section may have caught the bottom. Looking for a selloff short term, but there is green light to go long here. You could use the current year low as a stop @ $50.25.
Here is a quick update on good old USO. Here is a weekly chart of the oil etf. It broke thru its resistance and closed above $55.00. Notice the weekly parabolic stop and reverse is sitting close by at $56.04 which is almost the exact 23.60% fibonacci retracement from the high. Looks like oil will soon break out on the weekly chart as evidenced by the MACD cycle. Oil could certainly go lower but long term is starting to look bullish again.
I don't trade equities so I may be missing something but if your view is such that you want to be long/short crude why would you not take a position in the futures rather than paying these guys 50 BPS to try and do it for you?
The oil etf is fairly straightforward and easy to trade. Whereas the actual oil futures are more involved.
Several reasons. You would need to have a futures account, understand margin, leverage, timeframe/direction issues, the absolute necessity of a sound trading plan including stops. Not that you don't need all that for equities but I think that the USO etf is a more direct way to participate in the direction of oil without taking the highly leveraged crowbar style of futures. As an aside one of the reasons I started posting here was that I have been somewhat surprised by the lack of participation of oil traders in terms of posts on the energy futures. Some of the discussions there to me have gotten overly personal and off topic. I don't know if oil traders don't want to or are unable to post their thoughts on what is arguably the most important commodity in the world. I would like to see more participation on their part. Personally I think that oil is one of the great stories of our time. Its influence is huge on the stock market, bond prices, gold, euro, etc. Correlation between CL and USO is good enough for my taste but I am not a commercial hedger or hedge fund manager. I would welcome your input into any and all things crude. I have been trying to find a way to hedge the downside risk; several posters have commented on the lack of options for this etf. The only thing I see as a viable hedge now would be xoi options or high beta oil stocks.