DIG DUG: Oil Game Over

DIG DUG OILOil has had it's run and the entire world is complaining and protesting high fuel prices.  There's only one way to play this game, Short DIG and Long DUG.  The oil bubble is about to burst and it's all thanks to Wall Street.

First up, the playing cards:

Ultra Oil & Gas ProShares  (Public, AMEX:DIG) - Short this guy.  This ETF profits when the big oil companies stock does well.  Its largest 10 largest holdings are:

Security Description Weight

Masters, these companies have had their run, a tremendous one at that and the party is coming to a slow down.  Not an end, but a slow down, and that's enough to be Short this ETF.

UltraShort Oil & Gas ProShares  (Public, AMEX:DUG) - Long this puppy. ProShares seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Oil & Gas IndexSMWhat are the companies in that Index?  A ton, but the biggest holdings are:

Exxon Mobil Corp. XOM 25.07229819  $    88.61
Chevron Corp. CVX 10.85453138  $    99.42
ConocoPhillips COP 7.148783241  $    94.08
Schlumberger Ltd. SLB 6.348574586  $  101.30
Occidental Petroleum Corp. OXY 3.979433363  $    92.02
Devon Energy Corp. DVN 2.569932564  $  116.61
Transocean Inc. RIG 2.416943752  $  145.51
Apache Corp. APA 2.414883205  $  140.00
Halliburton Co. HAL 2.287084362  $    49.37
Hess Corp. HES 1.919688288  $  125.78
Anadarko Petroleum Corp. APC 1.911949064  $    77.69


There's a reason why Richard Rainwater cashed out his oil holdings, the picture below shows you his motive, the Price of Oil is approaching a Peak:


Who the hell is Richard Rainwater?

Time Magazine 6/5/2008 -- Eleven years ago, after doing a lot of studying and a lot of thinking, Richard Rainwater convinced himself that the long decline in oil prices that had begun in the early 1980s was about to end. As a billionaire who had made his name and fortune steering the Texas oil riches of Fort Worth's Bass family into lucrative nonenergy investments like Disney stock, Rainwater had the wherewithal to act on his conviction. So he plunked down about $300 million of his own money on energy-company stocks and oil and gas futures.

For a while it looked like a boneheaded move. At the end of 1998, the price of oil fell below $10 per bbl. Regular gas sold for 90¢ a gal. While Internet billionaires were being minted to the right and left of him, Rainwater was getting poorer by the day.

You can guess the rest of the story. The dotcoms imploded; the price of oil climbed, climbed and climbed some more--and Rainwater's energy bet came to look like one of the better investment calls of our time. It has netted him about $2 billion, vaulting him from the mid-200s on Forbes magazine's 1999 list of the 400 richest Americans to No. 91 last summer (with $3.5 billion overall).

So guess what Rainwater did a few weeks ago, right after oil prices topped $129 per bbl. for the first time? "I sold my Chevron," he says. "I sold my ConocoPhillips. I sold my Statoil. I sold my ENSCO. I sold my Pioneer Natural Resources. I sold everything."

Masters, let's face it, we are stuck with gasoline prices, but the massive spikes in oil are done with.  Oil won't come down much but it is not going to keep pushing to new highs on a daily basis.

But how soon could this happen?

Weeks or months, but it's coming.  Here's the kicker:

Once Wall Street and the analysts see the price of oil not growing oil hits a plateau, the big Oil companies will get downgraded because they won't be able to continue their massive profits and revenue growth. The Street only cares about what will next quarter be, what will 2009 bring - Not how much money did you make shareholders yesterday.

The warnings signs are here, big oil is going to get hit hard, and if you are in those stocks, expect a pullback.

Short DIG and Long DUG.


The world is crying about high oil prices, just take a look at all the stories on Google News about Oil Protests, the public has had enough. 

We are stuck with $4 and soon to be $5 gas, but we can ease the costs of filling our cars by cashing in on the greed of oil compaines.  The Tree Huggers and Greenpeace have a new reason to protest, just like all of us because hippies have to fuel their hybrids as well.  High oil prices are done with, just look at the chart, nothing that good lasts forever, it never does on Wall Street. 

Closing Crude Oil Futures Price  


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Oil prices drop after five-dollar surge


6/12/2008 - 4 hours ago

LONDON (AFP) — Oil prices fell on Thursday as the dollar strengthened and after a five-dollar gain in response to a US government report that showed American crude reserves dipped for a fourth week running.

New York's main oil futures contract, light sweet crude for July delivery, dropped 1.48 dollars to 134.90 dollars per barrel.

"Oil futures are lower as the dollar strengthened ... amid expectations that a rebound in US retail sales will increase the chances of a rate rise in the US," said Sucden analyst Nimit Khamar in London.

"Oil markets have been increasingly influenced by the dollar over the past year, as market participants have been using dollar-denominated commodities as a hedge against inflation and their dollar exposure."

A stronger US currency makes crude priced in dollars more expensive for foreign buyers.

The New York oil contract had rocketed by 5.07 dollars to a close of 136.38 dollars on Wednesday after publication of the US inventory report.

"It could be a volatile time," said David Moore, a commodities strategist at the Commonwealth Bank of Australia, commenting on the reversal of prices on Thursday.

"You've got to wonder, did it overshoot a bit? Or is there more to come?"

There may be fluctuations but the overall near-term trend is higher, Moore said.

"I think the mood of the market right at the moment has become more bullish overnight," he added.

New York crude had struck a historic high 139.12 dollars last Friday, when it won a record-breaking 10.75 dollars in one day's trade.

On Thursday, Brent North Sea crude for July delivery declined 1.27 dollars to 133.75 dollars, after hitting a historic peak of 138.12 last Friday.

Wednesday's surge in prices came after the US government said American crude stockpiles declined by 4.6 million barrels in the week ending June 6.

That was far heavier than market expectations for a drop of 1.5 million barrels and marked the fourth straight weekly fall.

Moore said prices were supported by the latest US data but also by news of a planned June 22 meeting of the world's biggest oil producers and consumers to discuss skyrocketing crude prices.

The meeting, to take place in Jeddah, Saudi Arabia, will be at head-of-state level. British Prime Minister Gordon Brown confirmed his attendance on Thursday.

How about this for oil protesting:


More than 100 cyclists have ridden around London naked in a mass protest against dependency on the oil industry.

Protesters on The World Naked Bike Ride cycled past Piccadilly Circus, Big Ben, Covent Garden, Oxford Street and the US Embassy on the 10km route.

Riders in 54 cities were protesting at the "destructive effects of car culture" and celebrating "the power and individuality of their bodies".

The ride ended at the Serpentine in Hyde Park.

Rider Melissa Evans, 32, said: "This shows how serious we are in opposing oil dependency.

"Like many people, I'm afraid of showing my body in public, but I'm more afraid of relying on environmentally-destructive fuels."

The event is part of London Sustainability Week 2005 and National Bike Week 2005.