I intended to buy more today and watched DUG @ $26.12, thinking that linearly it should have fallen much farther. Especially with over a $10.00 jump in the price of oil per barrel , just today. And that it jumped about $6.00 yesterday. I would have thought that it would retest $25.41. But it did not. To end up over $28.00 per share on shorting does NOT make sense to me. Maybe when it hits $150.00 per barrel I will be able to buy some more ??????? That is why I am playing this , it is crazy, and does not & IMO  & can not keep this up, forever ? Can it ???

 

I think it does make sense. DUG is short an index of energy stocks (not commodities) - I'm guessing (haven't checked) that Exxon would be a big part of that index, and it was down 2.8% today, and most other energy stocks were also probably down, while DUG was up approx. 2.4%. So, lots of idiotic momentum trading being done by hedge funds, program traders, and other types of wall st manipulators, just wildly buying oil, wildly selling stocks.

 

That makes sense K53. Why didn't I think of that ?

krankor53:

...and most other energy stocks were also probably down, while DUG was up approx. 2.4%. So, lots of idiotic momentum trading being done by hedge funds, program traders, and other types of wall st manipulators, just wildly buying oil, wildly selling stocks.

The problem with DUG is that it's not strictly oil stocks being shorted, it's also natural gas, and from what I can tell they didn't go down yesterday (e.g., XTO was up about 1.5%).   You need to know, too, that DUG amplifies gains (or losses) by a factor of 2.  If you believe there's going to be a "blow off top" in energy, as a trading vehicle, one could make money here.

WJ 

Well said WJ, Last night on Consuelo's Weathtrack show Fairholme Fund (FAIRX) mgr. Bruce Berkowitz said that he has gone from an investment of 20% of the fund being invested in energy to only 10%. To view the show go to  http://www,wealthtrack.com/  and veiw transcripts. Fridays show should be posted by 6/16/08. Best regards, Don

Crude is down and the DOW is down but DUG is down 3.5% today. That seems like a big drop. I know that there are nat. gas stocks in here but it still seems like a nice one day drop.

Any thoughts from anyone out there who is also pissed off like I am LOL!!

MIKE W:

Crude is down and the DOW is down but DUG is down 3.5% today. That seems like a big drop. I know that there are nat. gas stocks in here but it still seems like a nice one day drop.

Any thoughts from anyone out there who is also pissed off like I am LOL!!

DUG's index is is the inverse of the DJ US Oil and Gas Index.  This index is weighted 27% to XOM, and 40% to XOM, CVX, COP, and SLB combined.  These stocks are all up 1-3% today, so it is not strange at all, Mike, nor does it have much (if anything) to do with NG.

DUG is more about being short the big integrateds than anything else.

And he integrateds are currently functioning as self-hedging instruments for oil and refined products.  As the price of crude falls, production revenues may decline but the crack spread will widen so refining results will improve to balance out production.

DUG is not a great vehicle to short the high price of oil, if that is your intent in holding the security.

HTH

TJ

http://www.cbsnews.com/stories/2008/06/17/broadcasts/main4188620.shtml Are they increasing the cost of fuel for consumers by 25 to 50% ?

Whats a Drak market?

I noticed that trading volume on dug has exploded in the past 6  weeks, especially on up days. A bottom may also have formed at the $26 level.  Patterns like this can frequently signal a turn is imminent, but I still don't see any slowing in the oil price.  Does anyone else see something that I am missing?

uh 

UH, while I do not know what a Drak market is, many hedge funds are investing in DUG. Supposedly anything above $125 per barrel is unsustainable in the long run. Discloser, I am still in and looking to buy in the $25.50 range.  Best regards, Don P.S. FWIW.. I thought that you had a good position in the $27's