PAIRS TRADE - BUY OIL, SHORT XLE

Perhaps a rush to own dividend paying XLE shares and the run-up in crude oil prices post-election has pushed the XLE to a dramatic, climactic peak, but now it looks vulnerable to a fall.

OIL is an ETN (exch traded note) and XLE is an ETF (fund of stocks in the energy sector). Do you due diligence on these prior to establishing your positions.

I like how these two trade together and I like the sizable disparity lately. I have pointed out this pair before, but didn't give specific trading parameters.

This time I believe risking 5% to make 5% to 8% is the right trade for the next 5-15 days.

Cheers.

Tim 11:40PM EST Monday, Feb 10, 2013