Wednesday, August 20, 2008

Long the Ultra Oil & Gas Proshares - DIG

The XLE (energy spider) broke thru the $74 level I previously outlined, just prior to the inventory numbers, which compelled me to get involved. I am now long 1 unit of DIG at $84.25 with a stop at $79.68

I had a reader email (thanks PH) asking why I am going long energy stocks when I believe we are in a bear market for stocks and in a bear market all stocks go down. Excellent question. I prepared to go long energy stocks just as I am prepared, when the charts tell me, to go long any commodity stock, as we are in a commodity bull market. Yes, it is possible for certain sectors to be in bull markets while the broader tape is in a bear market.

The broader bear market must be respected because it's devastation can cause margin calls which then can have temporary, yet no less painful, negative setbacks for the stocks in sectors in bull mode. This is where investors have profits and they don't sell their losers like a real pro would but rather they sell winners in the gold and energy arena to cover the margin call and even more ridiculously buy more of their beaten up losers in the misguided attempt to get a bargain averaging down. Now you all know how I feel about this.

PH,I hope this clears things up for you.

Good speculating to you all and never ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units of Powershare Agriculture ticker DBA @ $35.35 stop $34.79
Long 2 units of XTO Energy ticker XTO @ $45.40 stop at $44.48
Long 1 unit Currencyshare SwissFranc ticker FXF @ $92.70 stop at $90.68
Long 1 unit Ultra Oil & Gas Proshares ticker DIG @ $84.35 stop at $79.68
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $128.56
Short 3 units FedEx ticker FDX @ $87.10 stop at $88.16
Short 2 units of Apple ticker AAPL @ $178.05 stop at $182.76
Short 1 unit Blackrock ticker BLK @ $218.50 stop at $218.126

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