Well, the opening bell should have been sensational for me today. I have 105 shorts, and the /ES was down nearly 20 points during the wee hours of this morning. Plus many of my shorts were energy-focused, and energy was getting killed.

However……….

Near the closing bell last week, I decided to hedge my shorts with a medium-sized SPY long, a large OIH long, a GLD long, and……..gack………a BP long position.

The GLD position, which I exited already, gave me a 1% return, and it was my largest long, so that was nice. But my SPY long eliminated that profit, and my OIH long – which I've also closed – got smacked down nearly 5%. As for BP……..the stock is in a free fall, and its P/E is about 5 (yes, five) and its dividend is into the double-digits.

So all those profits from the 105 shorts were neutralized by these 3 ugly longs. So, yeah, I was hedged all right. I hedged myself right out of a profit, because even though the S&P is down .81%, I am up just a tiny bit. It's disappointing.

Suffice it to say, I won't be tempted to play the "catch a falling knife" game with Gulf-wrecker BP, no matter how compelling its fundamentals appear to be. The Euro right now seems to be clawing its way out of its hole, but I don't think it's going to get anywhere past 1.225 or so, so we might be setting ourselves up for a better tumble today.

Anyway, I just wanted to share this object lesson as to how a "hedge" can be a "profit neutralizer". I wouldn't be whining, I suppose, if the Dow was up 150 and BP had sealed the leak and was soaring; that's the kind of uncertainty we traders face every waking hour.