Massive Volume: DUG

Inverse Oil ETF, DUG volume went off the scale today; the highest in at least four years.

The short-squeeze top in the sector, using XOP as the proxy was identified before today’s open in this report.

At that time, there was nothing significant about either XOP, or the inverse DUG other than being at opposite price extremes.

Today’s action changed that view. 

Apparently the juncture was significant enough; Today’s transaction volume in DUG, amounted to approximately $23-million.

That’s a huge number. Typical action is around $4-million.

Oil is inversely related to the dollar at this point.  The dollar proxy, UUP reached a new trend low last week but seems to have found support the past three sessions.

Being short the oil and gas sector via DUG (not advice, not a recommendation) is essentially a leveraged bet on a dollar rally.

In other markets, after weeks of analysis and planning, biotech had its reversal but we’re not in it (on the short side) having exited yesterday.

Not to worry; the massive volume inflow to DUG suggests that we’re on the right track with who (or what) is going to be most vulnerable to a market reversal.

Biotech (IBB) price action may retrace upwards to test. If and when it does, we’ll re-evaluate.

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.
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