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WLT Skyrockets: That’s Why I Suggested To Cover

June 27, 2008 5:45 PM

redarrowup.jpgWLT skyrocketed today as I thought it might do yesterday. It tried to reverse several times off the low yesterday and couldn’t do it, probably because the market was getting crushed. I am a little surprised that JRCC did not make a similar type of move. You have to be very careful when trading commodity type stocks as it is like there is constantly breaking news. In general, I would say it is a mistake for most people to attempt to trade them because of that. My call made anywhere from $6 to $10 in a couple of days, depending on where someone took it. If they had taken it several times, then would have made far more, obviously.

But once I saw the dollar open Thursday, I thought oil was “likely” to skyrocket and thought WLT was likely to reverse off any weakness. That is why I posted to NOT short it further and also I mentioned in my intraday comments that ”I would personally cover here”.

WLT made a low today of $95.75 and then skyrocketed to a high of $109.15. Incredible move, to say the least. I would have said to go long, but it was far too difficult a trade and I was not certain. The volume was huge today. Shorts and longs likely saw what I saw and everyone scambled. I just looked at the volume chart and the vast majority of the volume came once $107.97 cleared. Shorts scrambled to cover. Never doubt the significance of numbers.

This is why trading is not just simply saying “lower before higher”. You have to understand what is going on and what may happen and why.

Going forward, I would not chase WLT long here. I do not believe it was “justified” in taking out the high and appears to be short covering. In addition, I have no firm number to be long. Leave it alone.

Written by Tom@StockBlade.com · Filed Under WLT 

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