After quickly perusing the OIH chart, I decided it was going to move on out past 167. My trading plan was to wait until the DOE 10:30 release, and buy the dip on the storage capacity issues. I reasoned that oil is trading on a relative basis, and that outside of the US there must be shortages-or we are in another bubble? I put out a bid for the July 170 Calls.
The ETF traded toward the upper end of its range, 167, before pulling in, in a stair step pattern towards 165, by 10:30. Then the report was released and I turned to observe the price movement of oil. It barely moved, downticking less than a 1/4 of a point; the OIH continued downward and my bid got hit around 10:35.
The OIH ETF immediately reversed from 165 and I believed that my thesis was going to play out. I did not bother to put a stop in, as I worried that something akin to the Febuary option shakeout would occur. The price stabbed down through 165 again, and didn't stop until it hit 163. I quickly panicked as the ETF lurched towards a low and sold April 170's against the July options I had previously bought. It is a small hedge, as the options reside 4 percent out of their strike with 7 trading days to go until expiry.
The overall markets which I watch are showing some classic topping signs. Narrowing of the new highs, lots of money pouring into story stocks-which reversed hard today. Stocks are churning near the old highs, and the Nasdaq continues to churn 3 percent off its old high. Only the small caps look out and out bullish to me. Though they are in need of hard shake as they churn near their all time highs of 2007.
All in all - I give this day a -3 on a scale of -10 to 10. My one saving grace is that I am still playing small until we get a little volume and confirmation that we are busting through and continuing upward past the old SPY high of 134.5 or 1345 S&P 500.
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