The Fear is Gone

The current fallout in the energy markets - namely, crude oil - is beginning to look less like a bounce play and more akin to {insert your favorite tech name here} circa 2001. The long position I took in USO during the first week of December 06 is now a 17% loser. The set-up looked great then, and with so much geopolitical tension and continued demand from emerging markets (read: China), it seemed a likely winner.

But sentiments change, quite fast, even. Last night, OPEC announced an emergency meeting to shore up oil prices. A rocket was fired into the US Embassy in Greece. Today, an American Eagle commuter jet was held on the runway in Toledo, OH, due to a bomb threat. And crude is up for the first time in days, a whole... Two Percent? Not bad, but eighteen months ago we would have seen a frightening spike in oil prices on a day like today; those days are over. All it takes, it might seem, is some unusually warm winter weather in the vicinity of the NYMEX. But warm weather doesn't erode fear, and the fear is clearly gone.

The last time I rode a dog all the way down was during the tech crash; it is now quite out of character for me to hold this big of a loser this long. One of crude oil's last lines of technical support exists at the 200 Week Moving Average, which is currently around $50. If crude crashes through this, I will take my loss, and make note of my lesson. And, of course, re-buy oil the instant the cannons begin to fire upon Iran.


Unnecessary Disclosure: I am currently long USO.