Buying OIL at $70.55 on August 6, 2008 was like shooting a bird in the sky (look at my post – “OIL has dropped 20% – time to buy?”. It was a little bit of a gamble and I had to sit in the position for over a week, watching OIL fall as low as $66.32, before it finally stabilized.

This was a good moment to buy more and though I generally don’t like to double my position this way, I felt it was quite secure to buy another chunk of shares at $67.15 on August 19th. My biggest concern was my investment in OIL represented about 40% of my portfolio. I couldn’t take it easy anymore and spend trading time playing with kids. I had to watch my position. It doesn’t matter where the market would move, this had to be a very short term trade.

Preferably just a day trade.

Luckily, my timing was great this time around and OIL closed higher – at $68.62. Watching the whole trading session, I once again felt that the support has been reached and OIL has a potential to move even higher. So, I decided to keep it overnight.

From the trading viewpoint, it might have been a good decision, but from the family perspective, it was not. On Wednesday, August 20th, EIA Petroleum Status Report was due at 10:35 a.m. EST (7:35 a.m. MST). August 20th was also the first day of school for our 4-year-old.

School starts at 9 a.m., kids wake up around 6 a.m. So, between 6 a.m. and 9 a.m. we have to go through the usual routine of: brushing teeth, making beds, doing morning exercises, eating breakfast, getting dressed and finally driving to school. Meanwhile, just after we finished breakfast, I noticed that OIL started to fall in price. Fearing some bad news, I got glued to my laptop, hastily scrolling through Ameritrade’s news headlines. At the same time both kids went berserk and my husband snapped at me for “my crazy behavior.”

Geez, I have to be crazy in the first place, to be a Trading Mom and truly believe I can be a successful one.

Well, by the time I got the kids dressed and came back to my laptop, OIL had sunk over $2.5 from the high of $69.62 to the low of $67.02. My heart sunk with it. That was probably the worst moment of my trading in quite a while. I had enough – there was no way I would leave the house (and my laptop). Lawrence had to drive Brian to school.

The fall lasted 55 minutes and had an plausible explanation – the Energy Information Administration (EIA) Petroleum Status Report showed a huge boost in the petroleum inventories in the U.S. of 9.4 M barrels weekly change.

To my surprise, however, OIL stopped its rapid fall right there and crawled back up to $69+. That was a good sign, so I unloaded half of my position at $69, bringing it back in size to the original bet. And instead, shorted twice as many shares of UUP – a much less volatile PowerShares DB US Dollar Index Bullish.

The next day – August 21st was fun – OIL has opened over $2 higher and I sold the rest of the shares at $72.05.

Today I watched OIL sink over $4 and close at $68.20….luckily, without me.

OIL – iPath S&P GSCI Crude Oil Total Return (NYSE)

UUP – PowerShares DB US Dollar Index Bullish (AMEX)

Oil went up to $100 at first (from below $70 in August of 2007), than bounced back twice giving me a chance to get in at about $88. I didn’t feel comfortable – to me the price was still near its all time high.

I ended up watching crude oil going all way up to $147, before it suddenly collapsed to $118 or so. Unfortunately, I can’t say that I see any big support level at this price range – my usual guide for getting in. Buying OIL – iPath S&P GSCI Crude Oil Total Rtrn Indx at $70.55 – is rather an intuitive gamble (another choice was DBO – PowerShares DB Oil Fund.)

On the technical side, I see a big drop and I am looking for OIL to bounce back to at least $130+ range (create a “shoulder”). On the fundamental side, I see some reasons that might help this technical move:

- the possibility of aggressive sanctions against Iran over its refusal to suspend uranium enrichment program;

- another round of disagreements between US and Russia, as well as any new abrasive changes in Russia’s energy policy;

- the beginning of hurricane season and possible strike of weather in the Gulf of Mexico:

I am sure that oil traders took into current price consideration the following info:

and the last, but not least,

- continuing problems in the housing and financial areas and Fed’s stubborn interest rate position can fuel inflation and weaken US dollar, affecting two forces contributing to the price of oil.

OIL – iPath S&P GSCI Crude Oil Total Return (NYSE)

DBO – PowerShares DB Oil Fund (AMEX)