DUG IN?

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This article kind of slipped in at the end of the day and I didn't even hear it mentioned on the news tonight but it is a BIG deal. The House passed a bill to sue OPEC for high oil prices with a margin of vote that CANNOT be vetoed by the President.

I'm sure "suing OPEC"... whatever that means, may be popular and this helped garner bipartisan support. If you read between the lines you see that this is at least as much about trying to get at the real root of the issue: speculators like GS and MER that are driving up the prices (see last post on DUG) as well as the oil companies that are benefiting from this speculation. Here is an excerpt from the article:

"The legislation also creates a Justice Department task force to aggressively investigate gasoline price gouging and energy market manipulation.

'This bill guarantees that oil prices will reflect supply and demand economic rules, instead of wildly speculative and perhaps illegal activities,' said Democratic Rep. Steve Kagen of Wisconsin, who sponsored the legislation."

The fight is on! Bush threatens to veto the bill. I am not a lawyer but I believe a 2/3 majority vote in the senate is also needed to overcome any veto. This is an election year and the bipartisan support in the House is so high that the chances look reasonable. At the very least the news may slow oil prices and produce large pullbacks. It's about friggin time!... DUG is back in play... but I still personally use tight stops and still consider DUG a trade on pullbacks if until its chart changes and/or the Bill gathers steam.

I did buy some shares of DUG at 26.29 today. Not just because I came across this news when I took a brief look at the markets a bit before close but also because the futures oil contract expired today, after OPEC said it would not increase supply until its meeting in Sept. This caused traders to try to lock in the price now... and drive up the price. Additionally the RSI for DIG is approaching 70 (oversold)... It should be noted that the best time to buy is when the RSI is high and it starts to turn down since RSI is really a momentum indicator. However I did take a bit of a chance here. I have a tight stop in the 25.8s such that the MOST I risk here is a 2% loss. If I do stop out so be it... the risk reward is good here... if DUG runs even more and the RSI starts to turn it would be a better buy imo. AGAIN though this is just a trade. If it runs I will take profits and will move up my stop...

When I get a chance and it is apropos to do so I will post at night like I did... tonight!

In other news... my condolences to Mr. Kennedy. I wish him and his family the very best...

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