The short trading portfolio is taking it on the chin today in part due to the overall rally in market, but primarily on the 3% gain in oil. I originally called for a short trade in oil back in October (for instance here) based on the technical setup and the increase in inventories. Here is the latest chart with today's price action of the United States Oil Fund (ticker USO).
As it stands right now, I am not ready to pull the plug on the trade and I continue to think that the USO and oil are heading lower. The USO is on track to trade less than 10 million shares in today's trading. This compares to the downdraft of 12 million and 17 million shares on October 19 and October 22, respectively. This is not enough demand to signal a reversal of trend in my mind. In addition, I think today's action alleviates some of the oversold conditions and closes the recent price gap, essentially building cause for lower price.
As it stands right now, I am not ready to pull the plug on the trade and I continue to think that the USO and oil are heading lower. The USO is on track to trade less than 10 million shares in today's trading. This compares to the downdraft of 12 million and 17 million shares on October 19 and October 22, respectively. This is not enough demand to signal a reversal of trend in my mind. In addition, I think today's action alleviates some of the oversold conditions and closes the recent price gap, essentially building cause for lower price.
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