Tuesday, June 10, 2008

Trade Update: DUG

To get a big picture of our DUG trade look at the daily chart of oil ETF, USO. It gaped and made its all time of 113 on Friday June 06. Now it is pulling back and filling the gap. What happens after that? No one knows, but with the stochastic on the daily at 80 and turning sharply down and thats a good way to bet. The fact that were in an election year is more evidence for a pullback in the USO. Now look at DIG in the daily time frame. It made an all time high of 131.08 on May 21, then made a lower high of 122 on the same day as USO made its all time high. Lower highs are a big thing since they signal a turnaround. It's not coincidence that the high and lower high on DIG correspond to the points of the double bottom on DIG. This is actually in the process of forming a very bullish W where we have a low on May 21, then a higher low last Friday. So we will hang tight with our DUG.

We may want to look at some more ways to take advantage of the unwinding of energy. These two articles have a lot of good tickers in them.

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