U.S. Oil Fund E.T.F. (USO-N)

Best way to play oil prices. Good for oil bulls. Better to trade stocks if insure of direction on oil. 

His view on oil is a little different than what you are used to hearing. He would view it as a “lower for longer” phase. Looking back at timelines of commodity markets, they tend to move in long waves of boom and bust. From 2002 to 2011, the big China era, oil was doing well. After a bubble, which he thinks oil is in, you have the guillotine phase, and then it is sandpaper for 3 years. Thinks $50 is going to be about the ceiling, and will be range bound from $25 to $50. The story is not one of demand, it is one of supply. There is a lot of supply out there, so any time oil prices spike, we get regions increasing supply. He wouldn’t be Long on this.

He is pretty bearish on anything to do with oil because of the public policy and initiatives that we are getting globally with regards to carbon taxes, etc. The Saudi’s are pumping like mad, partially because they know carbon taxes are coming, and they are a low cost producer.

An energy play, so the decline in this is the stumble in the price of oil. For it to rebound, you are going to have to see oil back to around $75-$80 a barrel. Doubts if you will see this until the latter half of 2016, if even then. You could be holding this for a long time. You could write covered calls, which is simply selling a call option in which you agree to sell this to somebody else at a certain price. If you are in for a protracted period of time where you don’t think the ETF is going to rebound sharply, then this is not a bad strategy because you are collecting cash flow while waiting.

USO-N is commodity based. XEG-T concerns him because he does not know how the energy business will sort itself out.

ETF that holds oil futures. You can’t hold these for long periods of time. You are guaranteed to lose 15% if you do. They are fine for short term trading.

(A Top Pick Feb 12/14. Down 1.28%.) Seasonality for this normally starts around the beginning of February and goes through until may of each year. At that time, the technicals look very good but they have changed significantly. Not as attractive as it once was.

Tracks the price of West Texas intermediate oil. Seasonal strength is from July 12 (Don said this date and then said “now”, so expect he meant Feb 12^th. - Bill) to April 22 and this particular trade has worked 21 of the past 30 periods with an average return of around 9%. Chart shows the price of crude oil broke above $100 and is now in a well-established upward trend. Look for crude oil prices to move significantly higher.

DB Crude Oil Double Short (DTO-N) or U.S. Oil Fund (USO-N)? Really doesn’t like the leverage to ETFs. People really haven’t taken a close look as to how these things can trade. These are a very short term trading vehicle and even if you are in the right direction, because they recalculate the price on a daily basis, you can lose money. You have to be really knowledgeable and really paying attention.