DUG broke my \$25 stop yesterday. I gave it some room because of the recent \$6 / share distribution on Dec 22. So that effectively shifted the chart by 6 points. However, the Crude Oil broke above it's 20-day MA and is showing signs of strength, Figure 2. So I decided to get out of DUG as my short hedge and move into SKF.
My DUG shares were bought for \$30. Distribution was \$6.06. So my net lost per share on this trade is [(\$23.44 + \$6.06) - \$30] = -\$0.5. Which is a total loss of \$0.5 * 34 = \$17 + \$10 commission. It's basically a breakeven trade.
[caption id="attachment_993" align="aligncenter" width="500" caption="UltraShort Oil & Gas"][/caption]
[caption id="attachment_994" align="aligncenter" width="500" caption="US Oil ETF"][/caption]
As I was saying, I replaced DUG with SKF as my short hedge. We are testing the Oct support on SKF. Furthermore, despite the S&P breaking above the down channel this week and along with SKF's distribution, SKF is still above the psychological 100 level.
[caption id="attachment_996" align="aligncenter" width="500" caption="UltraShort Financials"][/caption]
Stop: \$96, the October support.
Target: \$120, a congestion zone.
Bottom line: This is merely a short hedge play so I actualy don't hope for big gains on this.