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Thrill-Ride Thursday - Fake, Fake, Fake
Thrill-Ride Thursday - Fake, Fake, Fake
Couertesy of Phil at Phil's Stock World
That is my favorite clip from Seinfeld that I often use to illustrate BS market moves. I'm pretty good at spotting fake market moves. As George says in the clip: "I know, I can tell - it's one of my powers."
Fortunately, we are now able to get a visual clue as to what's real and what's FAKE by zooming out to the bigger picture and keeping an eye on our charts.
While yesterday's gains may have seemed exciting, they were actually nothing more than the EXPECTED bounces off our resistance levels - bounces we had predicted back in April, at the same time we predicted the 5% pull-back in the first place. That kept us from buying the dips yesterday, as consolidating near the bottom of our FIRST 5% drop is no reason to go on a buying spree.
Even worse, as I said yesterday about the bounce we were expecting: "Of course, if they accomplish this by knocking the Dollar back below 76, then it will be meaningless." Well, meaningless it was as the Dollar finished the day exactly on the 76 line and, this morning at 6:30, they took it all the way down to 75.60 but the market is, as noted on May 4th - "still too heavy!"
There's still time to sell in May and go away, Randall Forsyth writes. Although stocks are off 3% in the month, top technicians see further correction ahead. While the S&P fell through its 50-day moving average, it remains far above its 200-day moving average, a sign the broad market is extended, according to John Mendelson, the esteemed veteran technical analyst. Mendelson likens the stock market to a stretched rubber band in a presentation to ISI clients -- just as it was in April 2010 before the S&P retreated 16%.
Meanwhile, the market's leadership has narrowed while the major averages made marginal highs. The number of new highs has declined steadily while the market's erstwhile leaders like AAPL, FCX and DE all topped out weeks ago. This is "classic stuff," Mendelson says, pointing to "serious negative divergences" in the stock market. Another warning sign has been the poor relative strength of financial stocks, which has lagged the market for a while. While financials have long ago ceded the market's leadership, "you do expect them to be in the game," he adds.
I wrote in yesterday's Member Chat that the news, including the Durable Goods Report, was so bad it was GOOD. Good in that it puts QE3 back on the table because, clearly, this economy is held up by nothing else! David Fry points out that over $25 billion in POMO was added to markets over the last week:
There wasn’t any seriously positive news to spark a rally unless you believe high energy prices are good for consumers. But, some permabulls got the rumor going that more QE is coming since economic data has been terrible. Completing a string of poor reports, Durable Goods Orders (-3.5% vs -2% expected and +4.4% previously) let bulls know there won’t be any interest rate hikes any time soon. Further given all these reports, next week’s ISM Index should be quite poor.
You’d think higher energy prices would discourage consumer (XLY, SPDR Consumer Discretionary ETF) and retail (XRT, SPDR Retail ETF) sectors but no, they rallied higher. But, upon closer inspection investors should view and would be surprised by the top component weightings for each of these indexes. XLY’s top weights include: MCD, DIS, AMZN, CMCSA, HD & F. XRT’s top weights include: BKS, GME, ANF & SFLY. None of these are what you might expect.
Anything that trashes the VALUE of the Dollar is good for the PRICE of equities and commodities but the real trick is that it's also been good for Treasuries too - as that's where the Fed dumps its freshly-minted cash. Forget the fact that 1.8% (Q1 GDP) is just 0.1% better than our WORST quarter of 2010 (Q2) or that the data we are gathering in our current Q2 indicates things are getting worse, not better and forget about the fact that the S&P was PRICED 20% lower last Q2. It's ALL about the the Dollar, which was VALUED 14% higher 12 months ago - everything else is just window dressing.....
Inventories (change) Structures Residential Inv. Export Government
| Category | Q1 | 2010 Q4 | 2010 Q3 | 2010 Q2 | 2010 Q1 |
|---|---|---|---|---|---|
| GDP | 1.8% | 3.1% | 2.6% | 1.7% | 3.7% |
| $43.8B | $16.2B | $121.4B | $68.8B | $44.1B | |
| Final Sales | 0.8% | 6.7% | 0.9% | 0.9% | 1.1% |
| PCE | 2.7% | 4.0% | 2.4% | 2.2% | 1.9% |
| Nonresidential Inv. | 1.8% | 7.7% | 10.0% | 17.2% | 7.8% |
| -21.8% | 7.7% | -3.6% | -0.5% | -17.76% | |
| Equipment & Software | 11.6% | 7.7% | 15.4% | 24.8% | 20.5% |
| -4.1% | 3.3% | -27.3% | 25.6% | -12.3% | |
| Net Exports | -$399.7B | -$397.7B | -$505.0B | -$449.0B | -$338.4B |
| 4.9% | 9.6% | 6.8% | 9.1% | 11.4% | |
| Imports | 4.4% | -12.4% | 16.8% | 33.5% | 11.2% |
| -5.2% | -1.7% | 3.9% | 3.9% | -1.6% | |
| GDP Price Index | 1.9% | 0.4% | 2.1% | 1.9% | 1.0% |
8:30 Update: Well, I'm glad we stayed short and I'm feeling good about the puts we took into the close now. GDP held flat at 1.8% but "expert" economists had expected an upward revision for some reason. We're not expecting a big move down in oil, as it's the holiday weekend and they want to keep prices high to screw as many Americans as possible at the pumps (it's almost comical to see how hard they are working to keep gasoline futures over $3) but that didn't stop us from grabbing USO puts as they gave us a gift yesterday by running the price of oil (certainly not the value!) back to $101 - $1 more than I predicted yesterday (never underestimate the ability of manipulators to make short-term market tops).
Of course, we can look at this as a "glass half full" as this horrible GDP report can only mean the Fed MUST continue to pump money into the economy. In fact, the Dollar is already falling to 75.45 on this news and that's masking the pre-market selling by propping up the PRICE of equities and commodities as more worthless Dollars are required to exchange for less valuable shares. Which one will stop going down first is the question. I think the Dollar will hold up before the sellers are done running for the exits but we'll have to wait for real trading to begin before we know who will win this battle to be the biggest loser.
Even as I write this, I just put up a trade idea in Member Chat to short oil futures at the $101.45 line with a stop if they break over $101.50. As I said in yesterday's post - if the manipulators want to pretend they want to buy barrels for $101.45, we are very happy to agree to sell them for that price because WE KNOW THEY ARE LYING! How do we know, because last month, the June NYMEX contract finished with 20,000 contracts (20M barrels) open for delivery and that makes sense because Cushing, OK, where the barrels are delivered, can only handle about 40M barrels and they are pretty full. Oil finished out that contract down near $96 a barrel. How did they get it back to $101.50 in a week (the pre-holiday week, where that $5 a barrel translates to $2 a tank from every driver in America)? By PRETENDING that they are interest in buying - get this - 406 MILLION barrels for July delivery:
Month
Click for chartSession
Pr.Day
Options
Open
High
Low
Last
Time
Sett
Chg
Vol
Sett
OpInt
Jul 11
101.24
101.90
100.48
101.40
May 26, 08:54
0.08
47873
101.32
406901
Call Put
Aug 11
101.74
102.37
100.98
101.93
May 26, 08:54
0.11
4363
101.82
93036
Call Put
Sep 11
102.23
102.80
101.50
102.38
May 26, 08:54
0.14
3240
102.24
99149
Call Put
Oct 11
102.49
103.09
101.71
102.67
May 26, 08:54
0.13
1203
102.54
47470
Call Put
Aside from the fact that it is simply not physically possible for 400M, or even 40M barrels of oil to actually be delivered to Cushing, I can tell you FOR A FACT that over 90% of those contracts will not only be cancelled before the expiration date in late June but that they will then be rolled over to August, where the CRIMINALS (alleged by the CTFC) at the NYMEX will then FAKE demand for another 400M barrels of oil. That is TEN (10) TIMES the actual demand. Do you think that affects prices? Of course it does, it's a $2.5 TRILLION Dollar Global Oil Scam and shame on you if you read this and just think someone else should do something about it. WRITE TO CONGRESS - STOP THIS CRIME!!!
The usual 424,000 people lost their jobs last week and that's not actually good as we're heading into what should be a busy holiday weekend where you would think that hotels, restaurants, airlines, retail, etc. would WANT to have employees on hand. By the way, one of my favorite things in the Governemnt's GDP Report is the section on Corporate Profits (which, you will be happy to know are up substantially, once again) because, in 6 paragraphs on the subject, the one thing they don't tell you is what Corporate Profits actually were!
We do know profits "increased $113.8Bn" for the quarter but, whether that is a 1% increase or a 10% increase is a matter of mystery. Why? Because if people knew what the actual figures were - there would be blood in the streets!
Speaking of revolutions - France is planning one over the weekend with major rallies and protests scheduled. Next stop on the Radical World Tour will be Germany (London already went - remember when they attacked Charles in his limo?) but you keep thinking it will never happen here...
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It took me a while to cotton on to the fact that the indices were effectively the inverse of the Dollar Index since 2008 - I've now started (in a small way) to start making a little bit of money on the indices.
Mind, this will work until it doesn't. I can imagine a double whammy of dollar falling AND US Treasuries and stocks falling.
DavidC
dleted, posted in wrong place
Ignorance is bliss. Daughter is a nurse practioner and her hubby sells cell phones by the seashore. They don't have any physical pm's although I have urged them to purchase, but they think life is great.
So... maybe some 50% might feel this way, and I sure as hell don't since I'm in the bottom 10%. Tired of preaching to the choir, and the lawmakers (i.e. lawbreakers), banksters et al want everyones trust to the end.
Bring it on before I have to grill the neighbors cat.
There is one pressing question that no one in the press is talking about.
With over 60% of all government debt rolling over in under 3 years, once interest rates start to rise with the trillion dollar a year deficits (for years to come), how long until we flat line?
This is not being factored into any discussion that I'm aware of.
You can buy crack now with Bama Bucks according to the local dealers..keep printing Bama Bucks and there will be no revolution here in the US!
I saw a piece the other day about the increased capacity at Cushing and went to find it for this reply, but along the way I noted that Cushing is only 5-10% of total storage capacity not even counting the SPR. I had been unaware that it represented such a small fraction of total capacity. Anyway I ran across this as well and since it had so much good data I copied a chunk of it (from IBD):
May 26, 2011 9:58 AM GMT
Oil prices rallied despite surprising increases in crude and gasoline inventories last week. Investors were instead thrilled by the huge draw in distillate stocks. The front-month contract for WTI crude oil price rose to a 2-week high 101.63 before settling at 101.32, up +1.74%. Price continued to climb further today. Fuel prices also jumped with heating oil touching 3.00 for the first time in 2 weeks after gaining +4.78% over the past 2 days. Gasoline strengthened in tandem despite weak demand ahead of the driving season and reopening of a refinery.
Total crude oil and petroleum products stocks jumped +6.76 mmb to 1054.22 mmb in the week ended May 20. Crude stockpile increased +0.62 mmb to 370.93 mmb during the week with both Gulf Coast and Rocky Mountain recording stock-builds. Cushing stocks climbed modestly. Utilization rate soared +3.1% to 86.3%.
Gasoline inventory rose +3.79 mmb to 209.73 mmb as demand declined -0.25% to 9.03M bpd. Imports jumped +67.87% to 1.45M bpd while production rose +1.40% to 9.26M bpd. Distillate inventory dropped for a 7th straight week, by -2.04 mmb to 141.09 mmb as demand surged +10.06% to 3.98M bpd. Imports declined -8.04% to 0.10M bpd while production rose +6.15% to 4.26M bpd.
So, we had GDP down, unemployment up, durables just flat out crashing, gasoline demand low, storage at most facilities filled with ships having to queue and wait to offload because there is no place to put all the oil, the president warning Arabia and the bigs in the oil industry that he will be preparing a plan to release oil from the SPR, all of this is bearish for gasoline and oil prices, yet both are rising. And the pisser for me today was the bloomberg report that consumer confidence is rising on lower gasoline prices. I do not know about where you are but here gas has fallen exactly 4 cents from the peak of $4.03 even though wholesale rbob had dropped into the $2.84 range, now back up to $3.04. It appears to me that there is a total and complete disconnect between wholesale and retail pricing with the jobbers and distributors simply refusing to pass on lower prices. As recently as 2006 the rack to retail difference was 10-25 cents, now it is never less than a dollar per gallon.
I am thinking that what they are doing with the collusion of or orders from the Fed and federales is they are going to flood the USA from coast to coast with cheap gasoline starting after the 4th of July weekend so that unleaded hits $2.50 a gallon by August 10th or so, falling gasoline and the concominent falling grocery and produce prices for a short three month period would mean no COLA for social security and other government retired/disabled. Then October 1 they can manufacture some kind of crisis, Saudi unrest maybe, a hurricane threat perhaps, a busted pipeline, something and bingo prices are right back to or over four bucks. It only has to drop from the start of the third quarter to the end of September for their little plan to work.
*what is with the spell checker here, it underlines every TH no matter where it is in your post.
@boiltherich
Would you mind to post the full URL(link) for the quoted passage, thank you, would be greatly appreciated.
>>
I do not know about where you are but here gas has fallen exactly 4 cents from the peak of $4.03 even though wholesale rbob had dropped into the $2.84 range, now back up to $3.04. It appears to me that there is a total and complete disconnect between wholesale and retail pricing with the jobbers and distributors simply refusing to pass on lower prices.
>>
I'm just going to point out here that a refinery buying crude off a tanker negotiates a price and that negotiation process has no obligation whatsoever to even turn on a computer and look at what NYMEX is doing that day. Similarly, when the tanker pulls into Nigeria to get loaded up with oil, the folks there negotiate a price for pumping it aboard, and they also may not even turn on a computer to see what NYMEX is doing.
What they MAY do is look on the horizon and see if there is more than one tanker waiting to get filled up. If so, the price rises. It rises regardless of what Cushing has to say. It rises because people want oil urgently and the seller is not in a hurry to sell it.
Don't worship what NYMEX or the futures markets say. China has been locking in long term supply contracts with KSA and Russia producers and the prices are non public.
Can the market make new highs without being above the 50 EMA?!
Wake me up when the beheadings start on CNN
At least we have none of Ilene's drivel today. Great post!
And, we have none of "g"'s drivel.
Good one, yeah.
WRITE TO CONGRESS! STOP THIS CRIME!
Ha!
Yeah... Might as well go to your local Mafia boss and telling him that there are a bunch of suckers over on the corner of X & Y who need a saint to tell them how to not get fleeced by the local guy who set up the 3 card Monty table...
Your tidbit about taking delivery of the oil could ignite a revolution. Whenever futures markets overheat someone ups the margin ante. Perhaps that's the wrong approach. As a once and for all lesson the Feds could force all commodities holders to take possession. It would be funny for the irrational longs to end up with tankers of crude and it would be funny for the naked shorts who would have to deliver. God what fun that would be.
The big moral crime is that the futures markets have been sold as a long-term investment vehicle to unsuspecting retail and institutional customers when, in fact, these markets are not even designed to function that way. Since all front month contracts must be closed out, it always becomes necessary to either roll forward or take delivery if you want to maintain a position. That’s great for financial intermediaries, i.e., brokers, traders, and market makers, because it generates excessive trade volume, fees, commissions, and profit margins on every roll. In addition, the futures markets primarily serve as a vehicle for the big investment banks to hedge their highly profitable OTC commodity derivative positions, ergo the need for more suckers (er commodity futures investors) to provide them with liquidity in the futures market when they need it. It would actually be fairly simple to modify current futures contract agreements so that they work better as a tool for long term buy and hold strategies. But, that would take much of the fun and profit out of the game for the banks and intermediaries, so, you can count on that not to happen any time soon.
The "Wednesday's Levels" graphs are sitting right on top of the first paragraph.
I'm pretty sure the rise from the March 09 lows has been one continuous fake rally across all asset classes.
all assets are more expensive because the dollar is worth less due to all the printing of new money.. Gold costs the same, stocks cost the same.. it is the dollars deflation that allows things to have a higher price tag!
JW, here's a chart of daily correlations for interest sake, current as at 27May2011
http://tinyurl.com/3clxxc6
bingo
if you use a fixed asset whether it be gold copper silver(to some extent) there is no alarming inflation, but if you benchmark to dollar then any sane person knows savers or poor or fixed salary americans are really poor. But the end game sucks for everyone because once poor or,like me sorta poor, realize they need to consume less the ponzi "credit" or leverage game ends.
Most Americans are fat lazy pussies, oh and stupid too.
Daggnabbit, you stole my punch line! Yes not forgetting that while the US is not only the biggest consumer, it is also the laziest and most ignorant. But how about this -
What says that the lower USD (the index) isn;t the result of appreciating opposite currencies (EUR, CAD, AUD etc) where the lower USD makes oil cheaper for these other folks. Whose demand (granted, not a patch on you US slobs) might increase pressure on the oil price.
I know it's hard to accept that the world doesn't belong to the US yet (you are working on it) but until then, the lower USD makes cheaper imports for "everyone else". Do you know them? They are the 6.0 Billion other cohabitants.
Since every time these other cohabitants suggest using another currency benchmark they get anihilated, 'regime changed' and summarily executed (love your work there Gondoleesa and Hillary, a nice feminine touch to the miltary). Seeing as they can't change the worthless USD for oil contracts, they are stuck with dollar cost averaging.
Which means you drop, we raise. A simple economic correlation we could all do without.
edit: By dropping your worthless USdollars, this further encourages rampant use of ZIRP/zero Libors/Fed Funds to export investment to emerging/working economies that actually have double digit returns - further compounded by a falling USD. If you ever finally get your worthless shit together, the repatriation out of "the rest of the world" back to good ol' US should be something special. If it happens in a hurry, don't be last to jump on board. I still have money on you ignorant bastards prefering a war to anything competitive.
Case1: Some useless junker doesn't understand the simpleton cause-effect relationship of floating exchange rates. Needless to say, it is not 'just' the US that is worth 2 nods of goatshit without oil, the other 95% of the populous can't do without it either.
I wonder...
Are "pre-born" souls which are about to re-enter the incarnate world, look back at the ledger of their past karma, and needing to fix certain things, have option of deciding in the next life to be:
- a fat lazy pussy (& stupid)
- or a cheese eating surrender monkey
I wonder...
COMEX is writing options on the afterlife?
lol
WRITE TO CONGRESS - STOP THIS CRIME!!!
The irony is so deep I don't know what to say...
Fake move alright, I hate holiday reversals leading into a 3 day weekend. Always happens.
Below is a video for those people who like trading on the market.
=> http://www.youtube.com/watch?v=pPlY12-hQLw
This video cracked me up LOL. FUNNY CHIT... LOL.
'Oh the irony'?
Irony supernova !