Wednesday, December 9, 2015

Tragedy of the Common Man

We are seeing a pile into oil ETFs like its a blue light special.  UWTI, the triple leveraged ETF, added 21M shares yesterday, to get up to 200M shares outstanding.  That is a 10% addition to the ETF, or $100M.  That is the most speculative oil ETF out there and retail is piling in like its a once in a lifetime opportunity.  USO was not far behind, and it is a combination of institutions and retail, that added 8.4M shares, or $100M as well.  The bottom pickers have not given up, and oil continues to drop.

Now, I do think oil will bottom in the short term before the year is over, and we should get a strong rally in Jan and Feb, but there are so many other better asset classes to be in for that strong rally, that I'd rather just be in ES, because it will go up with oil, anyway, and it doesn't have the negative effects from steep contango taking away from returns.

This week is the pre-FOMC meeting position squaring and crude oil collateral damage combo at work.  It will present a good BTFD opportunity later this week.  I am on the prowl to buy ES and ride it into the New Year.  Also think we'll get a good rally in bonds as well so I will add bonds into the long mix.  After thinking about it, I will hold off on gold but if gold can dip between now and Fed meeting to 1050, I will look to buy.


Anonymous said...

Yes tragedy of the common man. I am a common man.

Dumped the GPRO calls today at a loss but better than before.

Sold the SWN 8 Jan calls and rolled over to 7 March calls.

I'm looking for 10 on SWN in January. 11 in February.

Natural resources, oil and gas complex and commodities in general are gonna have a strong relief rally soon.

Market Owl said...

That is tragic. I thought you might have some hope if you were in an oil stock. But its a nat gas stock. Better hope for a cold winter.

MM111 said...

This decline is looking quite bad. Just take a look at the FTSE. Going long but only a small position.

Market Owl said...

I am looking to go long sometime today, probably around SPX 2024

MM111 said...

FTSE getting destroyed. Tends to lead I find.

Market Owl said...

Europe is the worst. Most overcrowded trade in all of finance: the short euro long European equities trade.