I bought dug back in early summer because I though the price of oil breaking into the 110 range was stupid. Little did I know oil would go to 150 and the oil and gas index would hit an all time high. At one point I was down 40% on the trade. I kept the faith that it would turn around and battled my inner demons. My theory was that the oil price was a bubble and when it popped it would be as nasty on the way down as it was going up. Unfortuntely, when I got back to break even on my trade I could not find the guts to stay in because of the ride down. Now I find myself out of the market altogether due to the wild flux's taking place. Kudos to those who were able to hold their positions and make crazy money on this etf. Based on what I am seeing now though, do you not have to look at DIG for a trade with these etf's gaining and losing 20-30% in a day of trading. The entry point will be critical but there should be an opportunity for a 20-40% pop because of the dramatic drop in the market the past few day.
However technically correct you may be, I found DUG at $80 just the beginning, with a covered call sold for $12 at $80 as a hedge due this Friday.
The OPEC ministers this weekend just about gave up, the cost of the real estate debacle is turning out to be world wide because many countries not only invested in our toxic paper, they copied us and wrote a crapload of their own.
Also the tendency to frugality on the part of the American people means DETROIT isn't selling its pig iron very well, even Toyota took a plunge, as our unemployment rate climbs past 6 to 7 to 8% over the horrid XMAS season we are about to have.
With the govt lieing to us about downward quarters, and now trying this "flat trend" crap which isn't going to sell either, and with nothing but BS and money to banks without forcing them to lend to anyone with any hope of keeping business alive, we are about to experience the fall in the use of oil to the ten to 15% mark.
Anecdotally, a friend of mine just bought some electrostatic heaters for about $100 to augment his oil heat. When I asked him whether he'd save any money that way, he said he didn't care whether it saved money or cost the same, just as long as the shiek of Araby didn't get his money.
That's joesixpac talking, and I think he is going to be heard all the way down to $55 a barrel.
By MarketWatch Last update: 1:09 p.m. EDT Oct. 11, 2008
OPEC to IMF: Bearish oil market to persist
SAN FRANCISCO (MarketWatch) -- Without a quick end to the financial market crises and improvement in the global economic outlook, the bearish sentiment in the oil market is likely to continue, OPEC said Saturday in a statement to the International Monetary Fund at its annual meeting in Washington, D.C.
Media reports cited Mohammad Alipour-Jeddi, head of the Petroleum Studies Department of the Organization of Petroleum Exporting Countries, as saying that the U.S. financial crisis and continued deterioration in the world economy is likely to sustain a bearish oil market and pose a risk of oversupply in the first half of 2009. "The shift to bearish market sentiment has been precipitated by a growing awareness of weakening oil market fundamentals, due to deteriorating economic prospects, an associated decline in oil demand growth and the healthy supply situation primarily from increased OPEC production," he said in the statement. Alipour-Jeddi said that existing regulations have proved "insufficient to properly contain the negative impact of speculative activity in the market, which highlights the need to consider further measures." He called for the extension of U.S. Commodity Futures Trading Commission monitoring procedures to the other regulated exchanges and the unregulated over-the-counter market and suggested ending regulatory loopholes that allow speculative positions to exceed existing limits.
BS..all they have to due is cut production to work off the imbalance..funny 4-5 months ago they couldn't produce enough now there is too much..this is completely whacked. From an empirical observation, I don't see any less drivers on the road than 4-5 months ago.