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Wednesday, September 10, 2008

Still Short Commodities as the Hedgies Puke



DUG had an important break OUT and UP, clearing major resistance and the declining 200 day EMA. This will drag all moving averages (blue, red and green) into the most Bullish orientation possible, where all the shorter ones are above a positively sloped 200 day EMA.

Up volume (black) completely trumps down volume (red). This leads me to believe that energy (XLE, grey area) will continue to slide.

Expect DUG to stall around the $48 to $52 area and consolidate before picking a direction. DUG is overbought, but momentum seems to be building (MACD).

SMN had an important break OUT and UP, clearing major resistance and the declining 200 day EMA. This will drag all moving averages (blue, red and green) into the most Bullish orientation possible, where all the shorter ones are above a positively sloped 200 day EMA.

Up volume (black) completely trumps down volume (red).

Expect SMN to stall around the $50 area and consolidate before picking a direction from there. SMN is overbought, but momentum is clearly building (MACD).

The original position was initiated around $27 on both SMN and DUG. As both ETFs stalled around resistance in the $37 area, that position was cut in half. After hurricane Gustav missed all things vital in the gulf that position was sized back up to full.

Prices are set to test $100. I don't expect the level to hold. Too many hedgies bet the farm on the oil super spike, peak oil theory... The margin clerks will be calling some serious chips.

As the hedgies continue to puke, I will remain short commodity intensive equities through these and other ETF's.

Follow this Trade:

2 comments:

Mista B said...

Boy, the collapse in commodities sure helped equities! Just look at 'em go! Down, that is.

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