04Dec11:03 amEST

Aftershocks from the Haircut in Oil

PT24IMa A reentry into ERY (triple-short energy sector ETF), which worked well for me last week, is still at the top of my list this morning as far as potential new traders go. On the XLE, energy sector ETF, daily chart, below, note how the recent multi-day bounce off well-defined support is threatening a rollover today. I still suspect many aspiring value investor stars remain trapped in energy stocks, not yet having capitulated. They should have obeyed their stop-losses to avoid the pain of the drawdown in the first place. But, then again, that mentality is what sees them stubbornly holding on to the massive losing positions. As for natty, I sold my UGAZ long for a nice 15-20% win a few weeks back, and now natural gas is cratering every day. I had no way of knowing that would happen. But it does reinforce the lesson that the highly-levered ETFs are trading vehicles only, not buy-and-hold instruments. Regarding equities, keep an eye on the IWM, the small cap ETF, as it negotiates its 20-day simple moving average. Whichever way that resolves, so too should the market. XLE

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