Saturday, December 20, 2008
Capitulation in oil
Though we may re-test these lows and potentially go minimally below them, yesterday's action constitutes capitulation in real-time. As a proxy for investor sentiment in oil, the ETF with ticker USO attempts to track the price of oil and its chart is compelling:
Also encouraging is the percentage of bullish sentiment among investors:
Oil, using the ETF USO, is a low risk short term trade regardless of where you think the long-term price of oil is headed, because no market moves in a straight line. Going long at the 32-33 price level in the USO ETF should be good for an easy 40-50% gain over the next 3-4 months.