DUG Up...

Full article is here. Excerpts below.

" demand for gasoline dipped 1.4 percent over the last four weeks. Meanwhile, gasoline inventories rose by 2.9 million barrels last week, more than three times the increase analysts polled by energy research firm Platts had expected.

Concerns about demand have helped pull oil down about 10 percent from its May 22 high of $135.09. Those concerns were exacerbated Wednesday by the EIA report and by moves by India and Malaysia to cut fuel subsidies, effectively raising their retail prices for everything from gasoline to cooking gas. Many investors believe subsidy cuts will choke off demand for fuel in the developing world.

"There's definitively smaller demand, (and) you have subsidies that are going to fall in energy consuming nations," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com."The psychology is just changing".

I will have to consider flipping into DUG tomorrow a.m at the right time. I was just early on DUG because I did not have time to watch the charts and RSI that week (work to do) so I jumped in one day early (and got stopped out) before the big turnouround bounce from 26 to 29.... I felt that DUG might reach it's nadir going into or just after Memorial Day. When I miss a big move my instinct is not to follow but to wait... additionally gas companies typically stay pretty lofty in the summer months so I was hoping for a pullback into the 28s (apparently there was one and I missed it)... Anyway this is different because the price of oil is largely speculator driven and it is already starting to collapse like every bubble does... fast and hard. DUG is already following and the pressure from Asia is the kicker... I don't want to be too short so I may swap out of SDS or SRS and get into DUG... we shall see... as always never jump in based on a news article... let the market come and the charts support it (so far so good). Please do you own DD. I am strongly considering DUG but the markets and price will help make the decision...

Here is a chart of OIL

Also on the watch list... CME... when a great company gets sold off this hard and has this kind of RSI... look for a potential bounce on a rising RSI with volume if the market permits. However this is a trade! Headwinds due to deleveraging and settlement with CBOT... so watch out here... this is a technical trade potential on a great company facing some difficult times...

On another brief note: notice how the futures were down big yesterday before the jobs report came in? The market was set to sell off after the close below the SP 50 two days ago... then it did a temporary 180 before ending up where it started.Depending on the jobs reports the rest of this week the market could still sell... I wouldn't recommend heavy long positions in anything right now except maybe the strongest non economy sectors (ferilizers...) even then I for one am not in heavily as I await a SP pullback for better buy points in POT and MOS... We'll see what transpires...
This blog is for informational purposes only. It does not give investment advice.