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 Quote), 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. ...