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Which Way Wednesday – Russell 815 or Bust!
Which Way Wednesday – Russell 815 or Bust!
Courtesy of Phil of Phil's Stock World
Yesterday was a bit disappointing.
Well, not for us, we were short. But, for people who ignored our warning and bought that dip - not so good. If we have to look at a bright side, it would be that we have not yet lost the Dow or the S&P so they will be our critical watch levels today while it's imperative that the Russell and the NYSE scramble back into our range if the market is going to make any proper show of strength.
Of course, if they accomplish this by knocking the Dollar back below 76, then it will be meaningless - as we will be right back where we started from when we decided at the end of April that a weak dollar and inflated commodities were going to lead us to disaster.
With oil at $100 a barrel and gasoline $4 at the pump coming into Summer driving season - it's 2008 all over again but maybe, just maybe, 3 years from now, we might see some of the people manipulating the oil market today get prosecute - the way they are finally prosecuting Parnon Energy Inc., Arcadia Energy and Arcadia Petroleum for manipulating the markets in 2008. Indeed the CFTC's allegations are a how-to guide for any small group of energy traders that want to move the NYMEX up and down 5% at will.
According to the regulator, these outfits would withhold the crude from the market, driving up prices at Cushing, Okla. Cushing is a key pipeline hub and the price point for all light, sweet crude futures — the “paper barrels” that are traded on the New York Mercantile Exchange. In other words - they did exactly what I have been telling you they do all the time - except these idiots were dumb enough to get caught because they haven't got the brains to set up a dummy corporation that doesn't tie back to the other traders.
Fortunately, our regulators were sharp enough (and you have to be sharp when Republicans cut your budget in half to protect their donors from regulations!) to notice that Arcadia Energy and Arcadia Petroleum might have something in common! It will be fun today to see what shenanigans are played on the NYMEX with the 10:30 inventory report. This is the last chance to run oil back over $100 and jam wholesale gas prices over $3 in time to stick it to consumers for the holidays. We shorted oil again on yesterday's silly run up (and again on the Futures at $99.50 in this morning's Member Chat) but we'll be quick to take our profits and then ready to short again at $100 if given the opportunity.
If you wonder why we don't participate in the run-up to $100 after stopping out our short play at the $98.75 line (so far this morning) - it's because, when we short - we are taking money from the people who are working to strangle the consumer and when we go long - we are part of the problem. It's not that we never go long - sometimes it's so obvious that they are jacking up prices that it's foolish not to play along - but it's so much more satisfying to make our money on the short side, making it very expensive for others to screw over our fellow countrymen.
If we only traded oil, perhaps we'd be forced to play both sides but our interests are varied enough that we are able to choose our battles and shorting oil happens to be a very profitable battle at the moment, with very sudden dips turning relatively small wagers into big winners with great regularity. We play oil by watching the Dollar as well as the support and resistance lines on the NYMEX as well as USO and we also keep our ears open for oil news, of course but the main thing we play for is the manipulation - when we see it, we squash it and it's very funny to see a rally quickly fall apart once we offer to sell barrels at $100 - suddenly there are no real interested parties...
There was no real interest in the Vietnamese stock market for the 9th consecutive session this morning as the VN Index fell to the lowest level since May, 2009. You would think this would be covered by the MSM because it was Vietnam that gave us an early signal to the 2008 Global collapse but I listen to CNBC all day and they seem to have missed the 17% drop over the past two weeks, adding another 3.7% drop this morning. Even worse, we're down from the silly run-up to 29.79 in January so down about 35% since then - well past "bear market" territory!
“Inflation figures were higher than expected and people are afraid that the consumer price index gains may accelerate to more than 20 percent this year,” said Nguyen Duy Phong, a Ho Chi Minh City-based analyst from ACB Securities Inc. “There are also rumors that the central bank may raise the reserve ratio, and that will hurt money inflows into the market.” “Rising inflation expectations will keep the pressure on the central bank to tighten further,” Prakriti Sofat, a Singapore-based economist at Barclays Capital, wrote in a note today, predicting that the refinancing rate will rise by a further 100 basis points to 15 percent in “coming weeks.”
In 2008, Vietnam was an early indicator of the collapse of the Chinese markets but, in 2011, the Chinese markets are already down 10% so not so much of an early call from Vietnam but Jim Chanos says we ain't seen nothin' yet. Chanos made a huge bet against Chinese real estate last year and this month he sent investigators to China to get more data and the data was - NOT PRETTY - and he is expanding his short call to include Chinese companies listed on US exchanges.
The combined sales targets of China's largest automakers could exceed total demand by as much as 32% by 2015, as the pace of building new plants outstrips growth forecasts in the world's largest market. "The industry may face excessive capacity as early as next year while Geely together with its peers may see their investments on capacity building go to waster unless they adjust their plans now," said George Yin, an analyst with BOCOM International Holdings Co. in Beijing. Chano's comment on Chinese IPO's in the US: "Almost all of them have odd looking financial statements,... We wish we could borrow (short) almost all of them.... I think that what my team found [in China], they actually came back saying we are not bearish enough. The signs of overcapacity were much even greater than their last visit, which was late last year."
Meanwhile back in our own declining economy - MasterCard shows a 2% drop in gasoline demand compared to last year and a 1.4% drop from the previous week so demand destruction has now undone all the gains of our "recovery." Prices, however, are 38% higher than they were coming into last year's Memorial Day Weekend. That's a net increase of 35% (98 x 1.38) more money spent on driving less than last year and, for the average driver (who uses 750 gallons a year), that's $40 a week stolen out of every one of our pockets every single week of the year by the US Energy Cartel.
That's the same Energy Cartel that Republicans voted to bail out with tax breaks last week, even though they are the 2nd most profitable sector in the economy (behind the Financials, who we also bail out) and who the Republicans just voted to remove 50% of the CTFC's desired regulatory budget - despite the fact that new regulations require them to considerably increase their oversight. As Mr. Burns would say: "Excellent!"
So the plan for this morning is to jack oil up to $100 again ahead of inventories and then they'd better have dumped a few million barrels into the sea or we're not going to have a drawdown to justify the run-up but come on oil bulls - we've got plenty of barrels we're willing to part with for $100 if you're REALLY interested.
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my s and p target short entering again is 1335.47.
I diagree with not covering your shorts, then raising them as you get into specic areas.
Phil, it is nice to see that you have this magic touch to play the oil market from the short side all these times only to cover at the perfect time and then get short again. How is your short at a $100 doing with with spot July at 101.60 (1:00 am est)?
Arcadia didn't seem to anything really illegal. They bought physical barrels through the EFP process and shorted the next month out. They held their physical barrels forcing the shorts to cover. Spot crude did move higher, but there were other big plays going on.
I think it would be more interesting to see GS trading book / customer flow as they were making markets and jamming the Sem group. http://www.forbes.com/forbes/2009/0413/096-sachs-semgroup-goldman-goose-... . You don't probably remember but the GS oil analyst was calling for $200 oil at this exact time. The CFTC are chumps, they should be looking into the silver and gold position limits to see what is going on there.
I see that you make absolutely no mention of the squid and the $500 mm that they made off of Sem. Makes the Arcadia guys seem like a couple of pikers.
I love the fact that your sense of the evil speculators who are causing all this pain, when in fact it is the Bernank and his printing bid which is the real culprit here. Your stupid comment that you like to play oil from the short side so that you are not part of the problem. but still get long when it is obvious, is insulting to those of us who understand that trading these markets is anything but a sure thing.
As a real long time player in the oil market you need to chill out and not pontificate on the inter-workings of the world oil market. Just stay short everything and let us know how that works out for you.
Love your stuff Phil, thanks for sharing.
Don't get too bearish before the long weekend, and its close to the end of month too.
Good point. Tomorrow is t-3 day. When profits can last be booked before EOM.
This guy Phil is FULL OF S. He lies. He pretended to be one of his users and was promising pie in the sky stock returns trading the Russell. Stay away from this guy.
Keeping your own money is not a bailout, dumbshit...
Wait what? Those broke financial companies had no money. Since when is getting a fucking bailout considered capitalism? Let bad business models fucking die.
So true...although all administrations (cough...the Fed) seem to be very keen on beating down those evil silver and gold speculators ...lmao
Because you know when Gold and Silver prices rise through the roof people really really have a hard time being able to afford gasoline and feed their families...jees.
WASHINGTON — When oil prices hit a record $147 a barrel in July 2008, the Bush administration leaned on Saudi Arabia to pump more crude in hopes that a flood of new crude would drive the price down. The Saudis complied, but not before warning that oil already was plentiful and that Wall Street speculation, not a shortage of oil, was driving up prices.
Saudi Oil Minister Ali al Naimi even told U.S. Ambassador Ford Fraker that the kingdom would have difficulty finding customers for the additional crude, according to an account laid out in a confidential State Department cable dated Sept. 28, 2008,
"Saudi Arabia can't just put crude out on the market," the cable quotes Naimi as saying. Instead, Naimi suggested, "speculators bore significant responsibility for the sharp increase in oil prices in the last few years," according to the cable.
What role Wall Street investors play in the high cost of oil is a hotly debated topic in Washington. Despite weak demand, the price of a barrel of crude oil surged more than 25 percent in the past year, reaching a peak of $113 May 2 before falling back to a range of $95 to $100 a barrel.
The Obama administration, the Bush administration before it and Congress have been slow to take steps to rein in speculators. On Tuesday, the Commodity Futures Trading Commission, a U.S. regulatory agency, charged a group of financial firms with manipulating the price of oil in 2008. But the commission hasn't enacted a proposal to limit the percentage of oil contracts a financial company can hold, while Congress remains focused primarily on big oil companies, threatening in hearings last week to eliminate their tax breaks because of the $38 billion in first-quarter profits the top six U.S. companies earned.
The Saudis, however, have struck a steady theme for years that something should be done to curb the influence of banks and hedge funds that are speculating on the price of oil, according to diplomatic cables made available to McClatchy by the WikiLeaks website
Read more: http://www.mcclatchydc.com/2011/05/25/114759/wikileaks-saudis-often-warned.html#ixzz1NONDuDNR All Wiki Ha8terz.. save your pussy hurts feelings for your mommy or ex-wife when she calls!
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