Dollars, T-Bonds and Crude Oil

With such negativity in the market, I decided that I would search for any glimmer of hope, a small nugget of positivity. Well, it leads us to the US Dollar, Treasury Bond Funds and the Dow Jones US Water Index. Other than that, most, if not all charts are well below their major moving averages and are still heading south.

I am not interested in buying the T-bonds or the water index but the US dollar has been front and center in my portfolio for a while now. I started to jump on the dollar bandwagon (8/24/08: US Dollar Buy Signal and 12/17/07: US Dollar Snapshot) prior to its bottom in early 2008 and I am now interested in jumping on another train.

I mentioned my idea last week: Crude Oil ETN’s. My wife and I have agreed to start purchasing a stake in crude oil investments, starting this week with a 25% purchase of our fully anticipated position (DXO is the instrument). The crude oil charts have not turned positive and I have not received any buy signals such as the ones I highlighted in the dollar earlier this year but I am viewing this more from a value perspective rather than technical. Maybe I will strikeout big time but I am swinging for it anyway.

Too many Middle East talking-heads want to cut production and raise the price of oil. Maybe I am extremely early to this “rebound/ bottom-picking game” but I can’t seem to reason how oil will stay low for long (talking years here, not a short term position).

Saudi Arabia’s king says the price of oil should be $75 a barrel, much higher than it is now, but his oil minister indicated Saturday that no measures will likely be taken until OPEC meets again next month.

“We believe the fair price for oil is $75 a barrel,” he said, without saying how the price could be raised.

Iraqi Oil Minister Hussein al-Shahristani said on Friday that 80 dollars a barrel is a “reasonable” price for oil and that his country would support any OPEC decision to cut output.

“A reasonable price for oil is 80 dollars a barrel,” said Shahristani on arrival in Cairo to attend a consultative meeting by the OPEC cartel to study slumping crude prices.

“We have to make sure that produced oil is used for consumption and not for storing.”


  1. I see you mention oil as a value buy, what are your thoughts on oil acting similar to the top it made in 1980 which Oneils lays out on page 208 of his How to make $$ book?

  2. Be careful with ultra ETFs they are horrible long/mid term investments. Just look at SKF of FXP these things act more like oversold/overbought oscillators. If you don’t take profits after a big rally they easily give back 60-80% in a few days.

  3. Like Jim Puplava from Financial Sense always says: “couldn’t agree with you more” Chris. Oil is a long term fundamental play you either believe or not…

    Here is a link to my Canadian Oil portfolio. I am slowly entering these depressed stocks with high dividen yields (I don´t want the dollar risk):

  4. IEF is another bond that has a very bullish chart.

  5. Derrick,
    I will take a look at page 208 later tonight and give you my thoughts.

  6. Sia,
    You have a point but you can’t stereotype the investment instrument with two ETFs. I can post up dozens of charts that show slow steady trends with gains for ETFs over a multi year period.

  7. I’m no expert on double ETFs but I can echo Sia’s comment after owning SKF and SRS a few months ago. In non-trending markets, they can do a poor job of tracking the underlying index.

  8. Found something perhaps useful about DXO on Google Finance (I know, I’m as shocked as you are):


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