Tuesday, September 26, 2006

 

Quick Alert: Oil Bouncing

As oil bounces here, the overall market sells off. Is it that simple?

Have we come to a point where in order to have a rally, we must see oil down?

If so, then we are likely to endure extreme volatility over the next few months. I do not believe the oil story is dead, unlike everyone on CNBC. To believe that oil is going down to $50 or lower and the market is going to blast off to new high's because everyone is so fucking happy is folly.

Right now, everyone is pricing in a dramatic decrease in oil. What if that doesn't happen? What if this recent decline is temporary and oil heads back to $75, then what?

Answer: The market gets hammered, oil stocks go up.

So, for now, I will stubbornly hold my shorts and consider adding to VLO, as the technicals improve.

Comments:
I know its not nice to ask, and I mean no disrespect, I like you and enjoy and learn(yes) from what you write, but what is you average cost basis for your RACK short?
 
The OPEC comment raised an eyebrow. I'm pondering my oil shorts. However, it would seem that Saudi has every incentive to undercut the price, which is the opposite of all the chatter. At $40 oil, Saudi stays rich, but at $60+ oil, Saudi arch enemy Iran also gets rich. And then there is the '06 election...Saudi's main fear is US pulling out of Iraq. That's worse for them that $1 oil for a year.

So I'm torn. Unwind shorts, or double down on today's strength?

What's your read?
Homespun
 
My cost on RACK is somewhere in the mid 27's.

My read on oil is murky too.

However, if I were short I would cover for fear of a squeeze.
 
This might be the funniest yahoo board ever: http://messages.finance.yahoo.com/mb/PGWC
PGWC goes down 25% on CEO/Board's voluntary delisting from Nasdaq and the crowd, quite long by their comments, loves it. That aside, something's not tr w/ this company. They took a massive beating, zero bounce.
 
Well so I am guessing they are going to take RACK up to $35? They sure are pushing it up like crazy today. Any thoughts?
 
Hey everything sooner or later works on wallstreet, even a busted clock(me) So I am thinking that since the inventory numbers have been so bearish... weeks in a row, that tommorow just as the iols are starting to hold and see buying, the numbers will be bullish for the first time in a long time, especia;;y heating oil ! and tommorow the complex really rallies, so I brought some oih and xle calls to help me !
 
Rack looks like it broke through key resistance of 29.85.

It may not be wise to hold short too much longer.
 
RACK aside, tech shorts aren't actually doing too badly today, both semis and software. At nosebleed levels, I'd rather sell than buy. If oil doesn't bring the market down from here, it'll just be something else, maybe its own weight. The macro prospects just don't seem to sync up with the market level to me. Maybe another 100 points this week? "Flag and footprints" on an all-time high? Yeah, and then what?
 
Jerome-

I share your thoughts. However,markets on not rational and could keep going up, despite logic.

I am not suggesting to cover your shorts, but maybe adding a few longs in the mix, just in case, makes some sense.
 
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