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Shorting DWTI (3x bearish crude ETF)

Shorting DWTI (3x bearish/short crude oil ETP) on this USO breakout with my price targets set slightly below these resistance levels (green). CL (crude futures) also broke out above the downtrend line on the 60-minute chart posted in the trading room after the close yesterday, helping to confirm the entry. Exact price targets & suggested stops to follow asap... it's been a busy morning reversing numerous positions long to short. More charts & commentary as soon as things slow down.

For those unable to short DWTI, a short of USO or a UWTI long is a viable option unless you plan to hold the latter for more than a week or so . My expectation is for a relatively swift & uni-direction move up to the 9.75 level in USO. If (and a big IF) that happens, the decay on UWTI will be minimal, if any. Again, that assumes a strong rally with very few, if any, down days in crude before that target is hit.

USO 60-minute Jan 14th

USO 60-minute Jan 14th

Note: See my reply in the comment section below for the reasoning behind my preference to short DWTI to gain long exposure to crude oil vs. going long USO, UWTI or any other crude tracking instrument.

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Jan 14, 2016 10:35am|Categories: Completed Trades - Long, Gold & Commodities|Tags: , |8 Comments

8 Comments

  1. GetItRiight January 14, 2016 10:53 am at 10:53 am

    Can we consider the equivalent targets the ones in the CL chart from the trading room?

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  2. jegersmart January 14, 2016 11:15 am at 11:15 am

    Am a bit confused as to whether you are going long or short, as the graph shows long targets but the title suggests DWTI is *bullish* Crude? I presume that should read “inverse” or “bear”. Either way, the techincal set up seems valid to me however I would be very careful with crude longs. There was an operational draw at Cushing today – but no more, I suspect that this rally may be shortlived. My target over the next few months is around $25 WTI, mainly because it may take this long to fill up Gulf Coast storage, and the rest of the world is pretty full so should result in a “washout”……after that though, mucho long exposure:) all imho ofc, good luck!

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  3. rsotc January 14, 2016 12:25 pm at 12:25 pm

    Yes, thank you! The “Bullish” 3x ETF part was a typo. I shorted (and added as an official short trade idea) DWTI but should have stated that it was the 3x BEARISH ETF, which gives me a net long exposure by shorting it. Although it might only be a quick trade lasting a few days, I remain open to the possibility that crude oil could bottom any day now & if so, what starts out as a quick counter-trend bounce trade (like this one) has the potential to morph into a longer-term trade that could last for weeks, months & possibly even years.
    Sorry for the confusion & thanks for pointing out the typo. I will correct it asap.

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  4. GetItRiight January 14, 2016 4:15 pm at 4:15 pm

    Randy, what are your stops and price targets for this trade? I assume you will present it on the USO chart, as some of us are unable to short, so DWTI price targets wouldn’t help.
    I am long UWTI myself.

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    • rsotc January 14, 2016 5:22 pm at 5:22 pm

      GIR- The price targets of the DWTI short or a UWTI long would correlate to those price targets (green levels) shown on the USO 60-minute chart from this post, although those are the actual resistance levels (I normally set the price targets on longs slightly below the actual resistance levels).
      I use the 1x (non-leveraged) ETF charts when trading the 3x because the decay can be so bad on some, especially if you go back more than just a couple of weeks, that the 3x etf charts usually give a distorted, inaccurate representation of where the key horizontal support, resistance & trendline levels are.With that being said, I will post some updates on this crude long trade, especially if/as we start to approach those target levels. G-luck on the trade.

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      • charlie January 16, 2016 4:15 pm at 4:15 pm

        Randy,do you also reckon that the USO long trade ( DWTI short ) is still barely okay? The USO close on Friday ( 8.79 ) on the hourly chart seems to have settled on the top line of the descending wedge – for a technically intense backkiss !

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  5. SmartPivots January 15, 2016 10:31 am at 10:31 am

    I am currently trying to get approved for a larger margin account to short DWTI after wave 5 looks complete. I am currently long UWTI for a wave 4 correction to 38/39 crude handle. I posted my idea last Thursday. Oil is the most speculative, political, and emotional trade out there. Shorting equity indexes off resistance is where one should have a majority of their portfolio focused at this time, in my opinion. If you cannot short, going long VIX from an ETF listed in the ETF center would work nicely also.

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  6. rsotc January 19, 2016 10:55 am at 10:55 am

    @charlie Yes, I do think the USO long/DWTI short still looks ok for now but once again, the most recent breakout failed to gain any traction/follow-thru so far. I’ll post a few charts along with the suggested stops shortly.

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