Commodities Essential - November 16, 2011

Alert: crude is looking extended. 


Let’s play for a correction by adding DTO now …


 


Crude oil has bucked the risk-appetite trend of late. While the S&P 500, the euro and other commodities have been mostly moving sideways, crude oil has been moving up, up, up. 


 


The move can be attributed to some near-term bullish supply and demand data; some longer-term industry research warnings; and relatively neutral market sentiment.


 


I’ve noted that crude oil has breached some key resistance levels, somewhat altering my intermediate-term view, despite the lack of follow-through from other commodities. Thus I’ve been hesitant to jump back in front of this rally too soon. While I was surprised to see it keep pressing higher, I was not ruling out a surge up through $100 before a direction change was in order. And after today’s more than 2% move has taken crude decisively through the psychologically critical $100 mark, I think this may be a good time to pick a top. At least, we can capitalize on a short-term pullback; at most, we can time this with a major deterioration in global economic forecasts and market sentiment and sustained downward pressure on crude prices.


 


Let’s place an order to add DTO (PowerShares Crude Oil Double Short ETN) ..


 


 


******


 


Trade Essentials.


 


 


DTO (Last Price: $38.88)


 


Buy shares of PowerShares Crude Oil Double Short ETN, symbol DTO, at the market. Then place an order to SELL ALL your shares of PowerShares Crude Oil Double Short ETN, symbol DTO, at $34.74, STOP. This order is good till cancelled. 


 


[Please note this is a 2x-leveraged inverse fund which means it will move roughly twice as fast, and in the opposite direction, as the underlying price of crude oil.]