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Holy mackerel, what a ride yesterday…

Think I’m talking about the stock market? Nope. A much bigger rally bubbled up under the surface of the markets—and it had zero to do with stocks.

I’m talking about oil, my friend…

And this rebound is giving us a gift-wrapped opportunity to score some lightning-fast gains, as you’re about to see…

Black gold posted its biggest rally in three years, leaping back above $42 and gaining more than 9% on the day. The financial media wants us to believe that the big move was sparked by the Shanghai Composite snapping its 5-day losing streak and U.S. GDP coming in hotter than expected…

But in reality, this was just supply and demand taking over—and a humongous oversold bounce that had been brewing for some time.

“As far as commodities are concerned, it’s all about supply and demand, and you’re having huge cutbacks in supply. We’re already having supply problems in some agricultural products and we’re going to have problems with oil products,” commodities maven Jim Rogers said in an interview Wednesday, transcribed by MarketWatch.

“So I don’t think that the bull markets in commodities have gone away forever, because supply is going to be a [factor]. You can have a bull market with flat demand or even declining demand if supply is not there.”

Have a look for yourself:

Oil Gets Bouncy

As you probably already figured out, most folks didn’t expect this pop. Sentiment in the oil market is in the gutter—that’s for sure. You’d be hard pressed to find an oil bull anywhere. Instead, you’re inundated with headlines like this one:

Get Ready for $10 Oil

I think $10 has been the trendy new “shocker” price for oil for the past 8 or 9 months now. But guess what? It ain’t happenin’ anytime soon. Don’t get me wrong—I don’t think crude’s shooting back toward $100 by the weekend—or even this time next year. But I do think oil’s been due for a classic oversold bounce for some time now.

Remember, markets go up and down. Not up or down. And commodities have been crushed lately. Forget about stocks for just a minute and their cute little 10% correction. The commodity sector—everything from corn to palladium— is locked in a nasty bear market.

But if you time it just right, you can play the oversold rips as short sellers start to cover, pushing prices higher at an alarming rate. Remember, short sellers have to actually buy back what they’re shorting in order to cover their positions, which drives up the price. That’s happening right now and that’s exactly why PRO readers have been doing so well with our ProShares Ultra Oil and Gas ETF (NYSE:DIG) play this week…

Commodities might still be mired in a bear market. But they’ll have their days in the sun.

And so will we…

The Daily Reckoning