Sold -34 DUG @23.44 and Bought +10 SKF @104.125

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"]UltraShort Oil & Gas[/caption]

[caption id="attachment_994" align="aligncenter" width="500" caption="US Oil ETF"]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"]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.

Posted 03 January 2009 in stocks.

BOUGHT +34 DUG @30.00

I entered a short to hedge my longs as planned. I have been trying SKF a few times previously but keep getting stopped out. So I'm giving a shot at DUG this time around. Today S&P broke down to the bottom of my up channel again. We could very well bounce back, but I needed to hedge my position as planned.

[caption id="attachment_980" align="aligncenter" width="500" caption="Ultrashort Oil & Gas"]Ultrashort Oil & Gas[/caption]

Upside: Positive divergence on the daily. Strong support at \$30. Unfilled gap above \$34.

Resistance: \$31

Downside: Still in downtrend. EMA shows downtrend gaining momentum. Oil broke recent downtrend too.

Support: \$30

Bottom line: This is a short hedge to safeguard my longs if the market do break down from here. As I noted before, this is a distinct possibility I need to account for. I intend to hold this for several weeks.

Target: At least \$34.

Stop: Observe \$25-\$26 level.

SOLD -30 DUG @31.63

I got stopped out of my -2.0 trailing stop for DUG. I got these shares for \$33.70 yesterday. I lowered my mental stop from \$32.40 to a -2.0 trailing stop so that I don't have to keep an eye on it. And \$31.70 was the low from yesterday. As you can see from Figure 1, DUG has broken below my trendline cleanly today. I will not enter until there's some good sign of weakness in the market. Figure 2 on the S&P internals shows good strength throughout today. However, it seems to be weakening on the bump to 870 as I write this.

[caption id="attachment_920" align="aligncenter" width="500" caption="Ultrashort Oil & Gas"][Ultrashort Oil & Gas][][/caption]

[caption id="attachment_921" align="aligncenter" width="500" caption="S&P internals"][S&P internals][][/caption]

[Ultrashort Oil & Gas]: [S&P internals]:

BOUGHT +30 DUG @33.70

I day traded Ultrashort Oil & Gas ETF (DUG) this morning for a tiny profit. Then the market looked weak on the second peak in the morning. That's when I decided to make a small position in DUG to ride the potential downtrend in the market. This is to hedge my remaining longs in SLW and ESLR.

[caption id="attachment_904" align="aligncenter" width="500" caption="S&P 500 internals"][S&P 500 internals][][/caption]

Notice at the first peak of 868, a major resistance as I noted in the pre-market analysis, we have a negative divergence of both the TICK and Advance-Decline line from yesterday. This is the first sign of weakness. On the second peak about 11:55, we produced a lower low on the TICK and the A-D line remained negative. However, the trough at 11:00 is a retest of 840 but the TICK was lower than yesterday. This is a bullish sign. So 2 to 1 bearish to bullish sign.

I chose DUG because it's just above a major support level. So that I would know when to get out if necessary. Also, the price / share is cheap so I can have more shares. Here's a list of the day trades in the morning.

09:49 BOT +30 DUG @33.71 10:02 SOLD -30 DUG @33.12 10:11 BOT +30 DUG @32.50 11:18 SOLD -30 DUG @34.17

I placed trailing stops of -0.40 and then -0.7 for the trades. They were both triggered.

As I was saying, then I decided to stay in for a swing trade. I bought at 12:09.

[caption id="attachment_905" align="aligncenter" width="500" caption="Ultrashort Oil & Gas ETF"][Ultrashort Oil & Gas

[caption id="attachment_906" align="aligncenter" width="500" caption="Ultrashort Oil & Gas ETF"][Ultrashort Oil & Gas

DUG actually broke my uptrend line in the above graph. I'm thinking of unloading it as we speak.

Target: \$38

Stop: \$33.20

Update: I was stopped out at \$33.14 but re-entered at \$33.02. The 3pm rally peaked at 855 on the S&P 500 and the TICK reached a new high of the day. The A-D line has turned up from -161 to -121. The higher TICK but lower high on the S&P is what led me to believe we're going to go down. In any case, this will be my last try on DUG for today. Stop: \$32.40. Target: \$35.40.

[caption id="attachment_915" align="aligncenter" width="500" caption="DUG"][DUG][][/caption]

[S&P 500 internals]: [Ultrashort Oil & Gas ETF]: [Ultrashort Oil & Gas ETF]: [DUG]: