GS is one of the largest holders of DUG as of 12/31/07. Either they have changed their position since then.... they want a significant hedge to their oil exposure... or they are hoping to preach the oil to 200 theme to add to the DUG and score a huge windfall on oil's way down...
As of 12/31 it was NOT a hedge as a quick look shows that they were not a major holder of the big
3 integrated's...
One thing is certain: whenever an analyst or investment firm speaks you have to ask what the bias may be and how that affects what they say... Nobody ever said this was the cleanest biz in the world...
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Regarding the technicals on DIG... it could have turned into a bounce off of resistance or a consolidation move in a long term bull trend... it is still to early to tell... it depends on whether it holds... The small risk high potential reward combined with underlying fundamentals has worked for me in the past... I will be the first one to admit that my real strength in the past has been in strong fundamental analysis especially regarding science and medical companies like CMED, SDTH, AMGN, TEVA, and others. There are certainly those out there that know much more about technical analysis then I do at this time... though I aim to supplement my technical abilities more and more as I go on here... I found an excellent, excellent text recommended by many top traders which I just ordered and will read when I have time... (Disclosure: I do not gain anything financially from recommending this... it is for the sole purpose of sharing knowledge. This link shows the book but you if you do a web search you can find it for a little cheaper). Do your DD and see what you think.
Best,
Jon
This blog is for informational purposes only. It does not give investment advice.
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