A Blow Off Top For Oil?

With oil up $12 per barrel in the last 24 hours, what’s going on?  Is this a blow off top?  A blow off top occurs when there’s literally panic buying and everybody that wants in gets in.  Volume rapidly increases and the investment goes vertical.  Oil is certainly going vertical.  More vertical than I’ve seen it in recent history.

Is it a blow off top or is it the big boys pushing it up and playing with the markets?  There’s no way for me to tell.  One thing that sticks out to me is the fact that DUG, the ETF that moves 2 times opposite the oil & gas stocks is actually up today.  So, energy stocks are struggling but oil is up over $6.  There has been a divergence between the commodity and the stocks the past few months and it’s widening today.  More money is going into the commodity than the stocks.  I’m short the stocks through DUG.

At the end of the day, I believe this is a blow off top for the short-term and I still believe oil will at least move sideways to down while the energy stocks fall.  I continue to like my DUG trade not only because I’m negative on oil in the short term but because I’m really negative on the stock market.

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4 Responses to “A Blow Off Top For Oil?”


  1. 1 Tim Ledbetter June 8, 2008 at 11:02 am

    Where do you believe the best investments are right now, well next couple of months, natural gas,water.
    Please reply

  2. 2 keggerss June 9, 2008 at 12:36 pm

    Right now, I don’t believe there are any good “investments”. I think there are good trades such as the various short ETFs. I think once we get an overall correction in natural resources, etc, natural gas and water will be good investments. I would be keeping my powder dry and accept low amounts of interest in exchange for safety of principal. The market is extremely dangerous right now.

  3. 3 J June 11, 2008 at 9:31 am

    As a way to short oil directly, have you seen HOD on the TSX?
    Hori. Beta. NYMEX Cr. Oil Br. Pl (ETF)

    Any thoughts on this as opposed to DUG?

  4. 4 keggerss June 11, 2008 at 10:11 am

    HOD seems to go down much faster than oil has gone up. I haven’t used this but it is a good way to play it. I’m negative on oil and stocks, do DUG was the choice for me.


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