Short the United
States Oil (AMEX:USO) ETF
This Exchange Traded Fund (ETF) seeks to reflect the
performance of West Texas light sweet crude
oil on a daily basis management minus fees. And you can imagine with the recent
drop in gas prices and the recent drop in oil prices, this ETF has been under
some tremendous pressure.
52 Week Low
In fact the
ETF reached a new 52 week low today, trading down 7% roughly to $50.15, with
the price closer to an even $50 in after-hours trading. I was looking for a
break-out below resistance at $50.85 reached on October 27th. Today
broke below this low point, signaling further deterioration in the fund.
Rally Signal was Close
The ETF
almost made a bottom formation earlier in the week when it reached $57.38 on
November 4th. But the breakout to the upside was short lived as the
economy continues to look week causing oil prices to fall on fear of a global
recession. The overall market performed almost as poorly today, with the Dow
Jones Industrial average falling 4.85%. Week employment numbers where the main
catalyst with a very high number of Americans claiming long-term unemployment
benefits.
The Trade
You can get
short the ETF on a rally day which could happen early on Friday. With such a
large drop in one day as we saw today, there could be some buying early
tomorrow which would provide a chance to get in gradually with other rallies
over the coming weeks.