Phil, let me be the first one to congratulate you on your victorious assessment of the 2008 economy. Yes, the year is far from over, but I've been reading your articles since January and when oil shot up to $146 YOU WERE THE ONLY ONE STICKING TO YOUR GUNS, always pointing to price manipulation. You're the man. I salute your wisdom and foresight. Thanks for your sharing your articles free of charge to the average [poor] Americans like us! I live in New England and this Summer I had to pre-buy the heating oil for my house. Thousands of dollars. I decided to pay and extra 0.25 cents a gallon for a "downward price protection". The customer rep, relatives, and friends thought I threw money away: oil will go a $200, it'll never come down again. Well, I listened to your point of view and now I'm ahead of the game. Yes, I repeat, the year is far from over, but the impossible happened: oil went down. Even if temporarily, no one is talking NOW oil at $200. We'll see. Meanwhile, thank you again! You saved me a lot of money and grief! – Junkyarddog (Seeking Alpha Reader)
Cramer says the sell-off today was caused by Ospraie Management liquidating a $2.8Bn fund and I hope he's right for a change!
Apparently the company lost 26.7% of it's value in August after "a substantial sell-off in a number of our energy, mining and resource equity holdings." Ospraie may not be the only fund in trouble but the total funds under management fell from $9Bn in March to about $4Bn. Not all players trading commodities are GS and there are very big losers in this game, which is getting more and more dangerous every week. Oil fell to $105.46 in today's trading but rebounded to $110.23 in a very BS closing pump that was unable to break back over the 200 dma at $111.26.
We were right on top of the oil bounce as my 9:45 comment was: "Oh – on the negative side. The Georgia thing is still hot and heating up so gold and oil may bounce which means don’t get too cocky on transport plays or negative miners. XXX " That came at the low of the day for crude and it only took me 7 minutes later, with the Dow at 11,758 to decide we were toppy, saying: "OK – this is the point where I take out my DIA putters and roll my DIA puts higher and leave them naked for a while, in case we get a pullback… XXX" Even though I had said at 9:25: "...it doesn’t pay to roll too early, especially on a one-day rally that could reverse on a bad data point tomorrow" I certainly wasn't expecting the entire market to reverse in one day. Cramer's explanation fits the action – it looked like an irrational selloff that was striking the markets hard – hopefully that can be reversed as well.
We did get a bad data point at 10 am, with Construction Spending down 0.6% in July, worse than the -0.4% expected but we expect our July numbers to be bad and less construction means we're still burning inventory so this should not have tanked the markets. ISM for August was a sad 49.9 but 50 was expected and surely we can't be that skittish. Tomorrow's data is August Auto Sales (the horror!), July Factory Orders are expected at 0.4% at 10 am and the Beige Book comes out at 2 pm. The last Beige Book was July 23rd and that was a pretty wild day where we tested 11,850 from a low of 11,450 but finished at 11,650 and then plunged to 11,100 over the next 3 days – so, not very encouraging from that perspective!
At that time we also had a surge in Jobless claims, breaking 400K for the first time followed by a surprising dip in home sales and Consumer Confidence was at 51.9 (now up 10% at 56.9) and oil was $125 a barrel, having bounced back from $120. Things are simply not as bad as they were on July 23rd yet we are 300 points off that mark. GOOG is down $30, AAPL is flat, FRE is down 50%, the XLF is flat, Gold is down $120, the XLE is down 5% and the XHB is up 10% – sounds good to me! If we can just drive a stake through the heart of oil once and for all, this market can really start flying as sector rotation is starting but the bulls are climbing a very slippery wall of worry and it's greased by oil for sure.
