Bolling: Head for the Exits on Integrated Oil

Everyone around me is asking one question about the oil shock we experienced last week: "What did I miss?"

Let me walk you through the week. The crude oil market was continuing a path lower for much of the time. For the first time in literally months, it was better to sell oil rallies than to buy the dips. That translates into a good environment for the shorts -- and I was one of them. I was very comfortable Monday and Tuesday. I was short crude oil on several platforms, and I was short futures and long UltraShort Oil & Gas ProShares(DUG), the inverse of the oil price.

Nothing goes straight up or down, but when I sell a small "pawn" (short) as a test of the market's strength and it comes back intact, I get the notion that the short is the right position. And it was on Wednesday.

Then Thursday happened. It was a historic day. After trading on both sides of unchanged in the morning, the European Central Bank President Jean Claude Trichet threw everyone for a loss. He did what most expected and announced a "no change" to ECB interest rate policy. Then he did the unimaginable -- he opined that the next move for the ECB would likely be to raise their already lofty interest rates.

Most in the trading world thought, and rightly so, that the ECB should be looking to lower rates in order to stimulate a recessing Euro zone -- ask France, Germany and England how they feel about a rate hike anytime soon.