Intra-Week Blog, Wednesday, 09/12/2007 03:42:16 PM ET
HAVING TROUBLE PRINTING?
Monster Short Squeeze
We were stopped out on the XLE put this morning on the monster short covering bounce in oil. The -7.5 million-barrel drop in oil inventories caused unwarranted buying and with so many short as the price hovered over $78 it caused a monster short squeeze. We are officially out of the play but I would still recommend maintaining a short position.
Oil prices can't remain at $80 with summer demand over. This short covering will crack soon. The futures expire next week so anybody long has to take profits quickly or risk losing them. Choose your short vehicle, the XLE is a good one in my book but there are other ways to profit from a drop in oil prices as I have written in the past.