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Are energy stocks topping? With oil (the commodity) and energy stocks going parabolic in the past couple of months, it's little wonder that there has been a concerted attempt to short the energy complex this week.
Mostly, it has been unsuccessful.
You can see this in the record volume that the UltraShort Oil & Gas ProShares [DUG
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] attracted. It provides twice the inverse performance of the Dow Jones U.S. Oil & Gas Index, a basket of stocks in the oil and gas industry. So if the index goes down 1 percent, you make 2 percent.
The United States Oil Fund [USO
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], which roughly tracks the price of oil, has also attracted near-record volume this week, as traders are also able to short this fund as well.
Yesterday, there was a concerted attempt to sell off oil, as well as oil and natural gas stocks, as traders were betting that the weekly inventory levels would show a build in reserves and this would be the right moment to take profits. It didn't happen -- there was actually a drawdown in supplies, so sellers were forced to cover short positions by selling the DUG or buying the USO.
Despite the pain inflicted on shorts, this is a good sign, an indication that a fairly sizeable group is trying to pick a top in energy.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes