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Wednesday, July 9, 2008

Time to be Short Commodities

In Commodities Seeing Demand Destruction, Canada Rolls Over I went over some short commodity ETFs.

Since then DUG broke OUT and UP from $26.50 to $31.00, or 17%.
Since then SMN broke OUT and UP from $27.50 to $34.00, or 24%.

Both still have room to run before hitting any significant resistance.

I didn’t get ‘full size off’ in KOL before it collapsed and will be adding on any bounces as mentioned in Coal Gets Smashed.

Other short commodity ETFs that I’m looking at or have positions in:

HED.TO (Horizons BetaPro S&P/TSX Capped Energy Bear Plus ETF)
HOD.TO (Horizons BetaPro Crude Oil Bear Plus ETF)
HXD.TO (Horizons BetaPro S&P/TSX 60 Bear Plus)

For a complete list of Horizons BetaPro ETFs click here.
I think it's time to be short commodities now as this is the last bastion of the cheap credit bubble Bulls...


Anonymous said...

Stay away from the oil black swan!

You may wanna also try taking a shot at SLX.

I'm biding my time with POT. There's a massive airpocket underneath that sucker and it's going to get smashed sometime this year I think.

Anonymous said...


What is your perspective on the market in the next 3-6 months. It seems from your posts that the markets will go lower and also the commodities. So is it a better option to stay in cash or going long DUG/SMN??? What about traditional safe havens like gold and silver. I am not a day trader and would like your opinion.


Anonymous said...


My knee-jerk reaction to your post was "Finally! Not a moment too soon." But then I got to thinking: The main reason why commodity prices went up in the first place is because speculative money had no other place to go. Does this mean other markets have become more predictable, and therefore more attractive again? And which commodities look most ripe for shorting? Rises in prices on staple foodstuffs like rice and wheat are considered to have been driven up mainly by the biofuel bubble (yes, I consider that a bubble too. Don't know if you agree.) Gold and silver is where money tend to go when everything else is unstable; with that in mind, I'm not sure they're all that expensive, under the circumstances. Finally, oil is obviously ridiculously overpriced at the moment, and it bizarre that it has gone as high as it has. I'd expect demand for oil to be highly price-sensitive, but with a lag before businesses begin to fold in earnest. Still... Why should it go down when it really shouldn't have gone up like this to begin with? Here's what in part is causing my paranoia:

(BTW, I'm not the same anonymous who told you to stay away from the oil black swan. I wouldn't presume to tell you what to do. :))

Anonymous said...

I fully agree with SMN (where I sold too early),
but with DUG you have the risk of the Iran thing blowing up... I will buy DUG then!

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