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September 13, 2007


Stock Du Jour (USO) & Random Observations

Decent morning then things reversed at noon and went into the crapper. A good example of a day where a good read of the broad tone would have helped you manage your risk better (i.e. lose less money than you might have).

Notable New Highs: Sohu (SOHU), Baidu (BIDU), Wynn (WYNN), Las Vegas Sands (LVS), Vimpel (VIP), Agrium (AGU), Celgene (CELG), Juniper (JNPR), and Procter & Gamble (PG).

Notable New Lows: Knight Capital (NITE), Progressive (PGR), Lennar (LEN), KB Home (KBH), Alcatel-Lucent (ALU), and King Pharma (KG).

Um, dumb question for my smart readers: if crude is at an all-time high, why isn’t the US Oil Fund (USO) as well? Here’s the weekly chart.

USO

This entry was posted on Thursday, September 13th, 2007 at 7:37 am (utc+8) and is filed under Trading and Investing.

8 Responses to “Stock Du Jour (USO) & Random Observations”

  1. Linda P. said:
    September 13th, 2007 at 8:21 am

    These guys explain it pretty well, Chairman

  2. tom said:
    September 13th, 2007 at 8:22 am

    must be something to do with the almighty dollar? ;-)

  3. C. Maoxian said:
    September 13th, 2007 at 9:47 am

    @Linda: Thanks for the link; I was clueless and it makes you wonder what the “intent of USO” is?

    “It is not the intent of USO to be operated in a fashion such that its net asset value will equal, in dollar terms, the dollar price of the spot price of WTI Oil (West Texas Intermediate light, sweet crude oil) or any particular futures contract based on WTI Oil.”

    @tom: So they’re holding over half a billion in cash? Sheesh, thanks for the link.

  4. d said:
    September 13th, 2007 at 10:41 am

    chairman,

    regarding uso…

    if you scroll down to the post by ‘aaron’, you will get a nice explaination by him.

  5. C. Maoxian said:
    September 13th, 2007 at 11:04 am

    d: Thanks, I didn’t know Aaron Schindler participated openly in the ET forums (he just had a very good month by the way).

  6. Tom Drake said:
    September 16th, 2007 at 3:04 am

    Linda’s source described it in a round about manner. Here is a visual which gives a better explanation of current demand versuis last year.

  7. C. Maoxian said:
    September 16th, 2007 at 12:26 pm

    Tom: Thanks for the visual.

  8. Maoxian » Absence of Backwardation said:
    September 20th, 2007 at 11:39 am

    […] Following up on the helpful comments to my recent USO post, I found this section in the GSG prospectus, which clearly explains the risk of contango markets or the “absence of backwardation”: “During a period when commodity prices are fairly stationary, an absence of “backwardation” in the prices of the commodities included in the S&P GSCI-ER may itself cause the price of your Shares to decrease. […]

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