The best hedge for long stock positions right now is a long position in crude oil. While far from perfect, the best way for stock traders to gain this exposure is probably through the United States Oil Fund ETF (USO).

It is hard to underestimate just how explosive this situation could become in the coming weeks and months. NYMEX crude oil is currently trading just below $100 and Brent crude is sitting at $115.35. If the latest spike in oil prices teaches us anything, it is that this commodity is incredibly volatile and little can be done about sharp price increases resulting from geopolitical shocks.

If you would have known that $100 oil was coming just two days ago due to major geopolitical strife in Libya and elsewhere in North Africa and the Middle East, the thought might be that the bull market would be a sudden bear market. So far that is not the case and the market was not even down a full percentage point today.

Here were today's unofficial closing bells:

Dow Jones 12,105.78 -107.01 (-0.88%)
S&P 500 1,307.40 -8.04 (-0.61%)
Nasdaq 2,722.99 -33.43 (-1.21%)

Today was all about international turmoil, hands down. Unrest is becoming civil war in Libya and turmoil in North Africa continues to rock headlines. Housing prices also showed yet another drop, something to be expected. This was the worst day in the markets in quite some time. Oil rallied sharply and gold rose on the panic trade.

Here were today's closing bell levels:

Dow Jones 12,207.15 -184.10 (-1.49%)
S&P 500 1,315.44 -27.57 (-2.05%)
Nasdaq 2,756.42 -77.53 (-2.74%)

Top analyst upgrades/downgrades

CBOE Volatility Index (VIX) rises 24% to 20.03 on antigovernment protests in Egypt.

United States Oil Fund (USO) closed up 4.3% as WTI Crude futures have traded up 4.37% to $89.38, according to Bloomberg. Traders were focused on short-term February 38 calls. February put option implied volatility of 29 is below its 26-week average of 31 according to Track Data, suggesting decreasing price movement.

Option volume leaders are Apple (AAPL), Citigroup (C), Amazon.com (AMZN) and Netflix (NFLX), according to Track Data.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

Friday was a day that felt more like a blast from the past rather than just another Friday in the markets. In short, it was a sea of red when it came to stocks. A less robust GDP figure was one thing, but the violence and rioting escalating in Egypt was much larger. Earnings also contributed some, but Friday was a day of geopolitics. Oil and gold were higher on geopolitical concerns.

Here were the unofficial closing bell levels:

Dow Jones 11,823.70 -166.13 (-1.39%)
S&P 500 1,276.38 -23.16 (-1.78%)
Nasdaq 2,687.06 -68.22 (-2.48%)

Top Analyst Upgrades & Downgrades

United States Oil Fund (USO) was up 1% as WTI Crude futures traded up 2.17% to $91.19 according to Bloomberg. Overall option implied volatility of 28 is below its 26-week average of 32 according to Track Data, suggesting decreasing price movement.

Siemens AG (SI) said it is confident of reaching its full-year targets after profits in Q1 advanced on demand for health-care, industrial and energy equipment. Overall option implied volatility of 30 is below its 26-week average of 33 according to Track Data, suggesting decreasing price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

This post is one in a series in which more than 60 newsletter advisors share their Top Stock Picks for 2011. This special report is courtesy of TheStockAdvisors.com.

"Oil prices have been on a roller coaster ride during 2010, and as we look ahead to 2011, "black gold" looms as one of the potentially most lucrative markets for investors around the world," says John Nyaradi.

The editor of Wall Street Selector explains, "For bullish investors wanting to participate in this market, my top pick for 2011 is the United States Oil Fund (USO).

U.S. stock futures are mixed this morning as investors await nonfarm payrolls figures for November. Futures on the Dow Jones Industrial Average gained 6 points to 11,369 and S&P 500 futures fell 0.30 point to 1,222. Nasdaq 100 futures rose 2.75 points to 2,190.

U.S. stock markets closed higher yesterday with the Dow Jones Industrial Average rising 106.63 points or 1%.

Economic data on nonfarm payrolls figures for November is due at 8:30 a.m. ET. An economic report on ISM non-manufacturing figures for November, along with factory orders for October, will be released after the opening bell.

The day before Thanksgiving was a very positive as the caution of Tuesday faded. The skirmish in the Koreas was calmed a bit and jobless claims nearly came in under 400,000 for the prior week. Even the woes of Europe seem to be calming on Ireland's major austerity cuts even if Portugal and England had demonstrations out in the streets. October new home sales was a disappointing 8% drop but consumer confidence is holding up.

Here are today's closing bell levels:

Dow Jones 11,187.28 +150.91 (1.37%)
S&P 500 1,198.35 +17.62 (1.49%)
Nasdaq 2,543.12 +48.17 (1.93%)

Top Analyst Calls

Investors will recall the massive rally in the euro which began at the beginning of June when bearish sentiment reached overwhelming levels. Could a similar pattern take place in the U.S. Dollar? If it does, investors who go long the dollar at these levels will be richly rewarded for taking a contrarian stand on the greenback.

The simplest instrument to use in order to gain exposure to a potential dollar rally is likely the PowerShares DB US Dollar Index Bullish ETF (UUP), which tracks the performance of the greenback versus a basket of foreign currencies. The UUP gained 1.70% on Tuesday, potentially signaling a trend reversal. Investors could also consider buying call options on the ETF in order to leverage their upside.

China hiked rates, which sent commodities south as it is a synthetic strengthening of the U.S. Dollar. After all, higher rates and a pegged currency works for currency investors. Oil dropped under $80 and gold took it on the chin. Add that up with a sell-the-news reaction on major technology stock earnings, and you have a bearish day. Late in the day there was only 1 of the 30 DJIA stocks up on the day.

Here were today's unofficial closing bell levels:

Dow Jones 10,978.62 -165.07 (-1.48%)
S&P 500 1,165.90 -18.81 (-1.59%)
Nasdaq 2,436.95 -43.71 (-1.76%)

Top Analyst Calls
Defensive Stocks for the Bears

After last week's huge run in the price of crude oil, it is time to think about taking a short position. This trade worked beautifully back at the beginning of August when crude was trading at similar levels. NYMEX front-month crude futures are now trading at $81.30.

Given the current economic backdrop, $80 seems to be the magic number over which oil has a difficult time sustaining itself. There are a number of important economic numbers out this week, any one of which could send the price of oil back below the $80 threshold. In the short term, a lot of things need to go right for crude to continue to march higher.

A narrower trade deficit and a lower report of weekly jobless claims did not keep the market endlessly higher again today despite the notion that the markets were at least up. The biggest sector news was an almost endless biotech bonanza of analyst upgrades and a plethora of drug news.

Here were today's unofficial closing bell levels:

Dow Jones 10,415.24 +28.23 (0.27%)
S&P 500 1,104.21 +5.34 (0.49%)
Nasdaq 2,236.20 +7.33 (0.33%)

Top Analyst Calls
BioHealth Business Daily

A rise in jobless claims was trumped by a housing number that was not so bad. There was also a rise in oil prices after NOAA released the path of Tropical Depression Three, revealing that it could be a threat to the Gulf of Mexico oil infrastructure. Regardless of the market move, this was another light-volume trading day. Ben Bernanke's testimony acted as a wash between yesterday and today because his lack of growth stance yesterday was negated today with more certain comments about new tools for the FOMC to use to counter a slowdown.

Here were today's unofficial closing bell levels:

Dow 10,345.76 +225.23 (2.23%)
S&P 500 1,093.66 +24.07 (2.25%)
Nasdaq 2,245.89 +58.56 (2.68%)

Top Analyst Calls

United States Oil Fund (USO) was recently down 38 cents to $34.43 in pre-open trading. WTI Crude futures were recently down 0.53% to $71.23, according to Bloomberg. USO unit net asset value reflects the performance of the spot price of West Texas intermediate light crude. USO overall option implied volatility of 36 is near its 26-week average of 35 according to Track Data, suggesting non-directional price movement.

Stocks with implied volatility above 30-day mean: Psychiatric Solutions (PSYS), Agnico-Eagle Mines (AEM), Moody's (MCO), Monsanto (MON), Wal-Mart (WMT) according to IVolatility.

Update is by Stock Specialist Paul Foster of theflyonthewall.com