Eric Bolling's Latest Commentary ~ market folly

Tuesday, November 4, 2008

Eric Bolling's Latest Commentary

Eric Bolling is out with another piece and he writes,

"Looking back on two years with similar profiles -- 1987 and 1929 -- we get a glimpse of what we might expect for the rest of the year and further. Both prior years, the market (Dow) was higher from the October crash lows by year-end. In 1987, the market came back 39% by year-end; in 1929 the Dow managed a 25% recovery from the lows seen during the October free fall. So sitting with a 19% gain from the October lows leaves room for upside going into the last two months of the year.

I have added some small positions to my very thin portfolio. I have added the U.S. Oil Fund (USO) and El Paso (EP). My feeling is that if we get this stabilization in the equities markets, oil's recent implosion will subside and crude might actually trade back up. Natural gas is El Paso's business, and a bump up in the gas price will help this battered stock.

My portfolio holds small positions in the SPDR Financials (XLF) and SPDR Homebuilders (XHB) and will for the upcoming quarter or so.

Lastly, I own PowerShares QQQ Trust (QQQQ) and SPDR Trust (SPY) in a very-short-term portfolio. These may be sold quickly if I believe the Senate, House and White House will all go to Democratic wins."

Overall, Bolling is putting an emphasis on being nimble and being able to get liquid. A lot of his picks are shorter-term and are being used as trading vehicles to benefit from the price action. Keep in mind that he is a trader and he acts switfly. I do agree with his selection of USO (which is essentially an ETF that buys front month crude oil contracts and is a direct proxy for playing the price of oil). However, I picked up DBO instead last week, which plays contracts of oil almost a year out, rather than front month. The reason I have done so is because the oil curve is currently in contango where the front-month is trading very cheap and the entire curve going further into the future is priced much higher. Therefore, whenever USO "rolls over" to the new contract each month, you're essentially getting crushed. While it is definitely nice to have ETFs to essentially trade crude oil in the stock market without having to go to a commodities exchange, you've got to be aware of the differences/limitations of USO or DBO. Keep an eye out over the next week or so, as I've got a piece coming out that will talk about oil more in-depth.

You can check out the entirety of his post on here.

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