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WLT Short: Why Trade Call Took Guts

June 26, 2008 1:16 AM

My trade call on WLT took guts because it is not like a normal stock. It trades on a commodity and as we have seen, commodities can change rapidly. if this was a “normal” stock, it would be $90 already, but it isn’t. I just wanted to go out on a limb and make a call that nobody else will to prove a point. I watch this stock a great deal and feel “comfortable’ enough with it that it will do as it “should”. That is why I made the call.  I also glance at the oil charts periodically to see where we are. I do not pretend to be a professional, nor an oil trader, but I do know enough to know where oil is “likely” to be, short term, unless news.

There is a reason oil has been sideways for a while now. It is the high and $130.75, I believe. Until one of them clears, I think we will see more of the same. But is what I see.

There are other stocks, like VLO for example, that repeatedly do not do as they should, and I generally avoid commenting on them, unless I see something.

Point being, I called the short at the all time high in an obvious bubble situation. Readers could have banked about 20% if in and out of the trade in a couple of days. Not bad for an amateur in probably the most riskiest sector - energy. Calling a trade on financials, for instance, would be FAR easier as it is less complex.

Written by Tom@StockBlade.com · Filed Under WLT 

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