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Oil ETF Slides Hard On Contango Tangle
On Friday we warned that massive retail inflows into the largest crude oil ETF were about to collide head-on with the widest contango in four years leading, in all likelihood, to “carnage.”
For reference, here was the setup...
…here is the carnage…
...and here is the contango coming in through yesterday until nervous selling drove the April contract lower, pushing the contango wider still, in what could turn out to be a very non-virtuous circle for all of the home gamers out there...
... as it appears we may be at a key level here...
* * *
BTFD!
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I try to tell people not to buy this ETF. They do it anyway. Some buy the 3X Bull... I just have to walk away at that point.
Why? You can buy popcorn and watch it in first row.
Any time I see the words "retail investor" I hear the sounds of bleating sheep waiting their turn to be shorn. This woyld be a great reality show but they'd have to change the names to protect the guilty.
LOL! I have to say, was a bit depressed today, but such remarks simply put a big smile on my face! Also, finally get to use the poporn maker i got the kids for xmas....
And I've been telling sheeples to BTFDAX ever since Draghi announced his bullshit QE.... +3000 points since October last year WTF
Come on Tyler, how about a story on this please?
Not a "sky is falling" story.
Good luck with that;)
Yeah, I guess we'll have to wait for the news of some high profile hedge fund blowing itself up first before there's any mention of it
And the CAC, Remember all the negative reports here about Russian sanctions, spelling doom for the French?
Well, the CAC reached 5000 today and +25% since Christmas... (It's okay Tyler, I'll report this shit for you)
What do you think the bottom of this trend is going to be, Tylers? You planning on throwing up the Bat-Signal for those of us who took your advice on the short side of this trade? ;)
Kind of like:
I lost $1000 at blackjack and sent another $2000 looking for it...
DWTI, UWTI 3X...in and out, sometimes 5 minutes...never more than 5 days...
Fully deserved losses.
uso is the worst investment vehicle and particularly so in contango.
Really?
Investment vehichle? Or trading it.
Sounds like you are a shitty trader, or have no investment excperience.
I've made money on USO...as well as other ETF's.
Entries and Exits son....tighten up
Yes Sir.
You'd think the market would provide some means for individuals to get exposure direct to crude oil as a commodity, but this ETF has certainly failed in that regard. They used to have the crude up / down pair, which would have avoided this issue, but it folded too. Maybe they need an ETN?
Royalty trusts.
USL holds twelve months of contracts. The monthly roll over contango rape is not so bad. It probably has other issues due to holding 12 months of contracts all approaching lows to match the front month though. I'm just saying it is out there. I personally have no good ideas on what this sector is going to do. Maybe I will look at it when Obama starts dumping from the SPR at the lows like Bush did.
Just one of TD's endless string of bullshit "disasters"...Must be a slow news day.
somebody has to compete with King World News
Contango, Fandango....let the party begin.
I prefer the Samba, but the Cha Cha is also nice....
Man, you gotta check out Boogaloo
Tyler you had an article last week in which you guessed this would happen. Nice call.
Thread needs moar Brazil bikinis.
i'm buying "the dip" in the form undervalued royalty trusts and energy equities, for the long term, and for dividends. empirical academic evidence suggests this strategy will win in the long term no matter how rigged the market may or may not be. but i'm a boring guy, so to each his own. personally, i love these types of durden stories though because of the sensationalism aspect.
How do you know its a dip?
Most ETFs have outrageous carrying costs, due to the losses when rolling the contracts forward, as the Tylers have described well in the past.
That must be why they are so popular..., or maybe it's the lipstick.
We little ants got brazenly cocky once and tried to play with ETFs, got quickly spanked and ran away properly educated we were out of our league. I can't believe retail investors are being seduced by this. Probably some unscrupulous advisors.
Miffed
Congrats, Miffed.
We smarter ants learn from experience;)
Thank god we had the smarts not to bet the farm but the experience still smarts. That's a good thing. Pain is the greatest teacher.
Miffed;-)
http://scharts.co/1HDllE3
I'm keeping an eye out,
47.77, WTIC
7.80, HOU.TO
292.561 now, trend 270 = WTI2 / HOU (tsx)
That's why comparison of the ETF price to the underlying oil price should be computed and checked using a scatterplot
Couple of suggestions. Identify the dates that USO Rolls. Also - graph that are legible would be nice. Thanks.