OPEC Surprises...

OPEC surprised the world today with a production cut which drove crude oil price up modestly. The world have been expecting a production boost from OPEC in order to combat high oil prices but OPEC ministers seem to want crude oil to remain at an acceptable level no less than $100. What in the world is OPEC? OPEC is a collection of oil producing nations coming together to agree on production control. Such production control aims to maximize economic profits like a monopoly does (minimum output, maximum returns). However, being an oligopoly, there are and have been problems with these nations actually moving as one. So, according to the Game Theory, many of them actually cheat on their own committments, resulting in a much lesser than optimized situation for all of them.

On the technical front, the Dow pulled up slightly again after yesterday's big drop. Like I mentioned a few days ago, slight pull ups usually occur after big drops no matter what the news say. Nasdaq pulled up significantly as the oil sector recovers, but not enough to reverse the current primary bear trend. However, Nasdaq is so near its 2200 support level that it is no longer wise to START shorting the QQQQ right now. It has bounced off this level twice; March and July. For now, volatility continues to be the theme of the game and could it be time to apply some volatile options strategies?