Wednesday Wrap-Up

Ho-hum – another day, another record for the Dow.

Much as I want to get excited about this I had to take it off the table this afternoon.  As oil stocks started recovering we dumped those puts (after hitting my VLO target of -$2) but, as we were getting close to my other target of 13,500 and nothing was stopping out, I decided to halve our uncovered positions.

We did manage to knock another 15 positions off the list but I couldn't help adding new ones again so we still have 83 open positions in the STP, but they are very well covered and, while we only have 15 puts, they do add up to 1/3 of the value of that virtual portfolio so we really are ready for anything for the next few days!

So rah rah markets – everything is great, it's an unstoppable money machine and if you're not in it you should buy high and sell higher blah blah blah….  You'll have to excuse me if I need to take a break for a few days.  As I said in today's comments, I'll be thrilled to hold here into the weekend and if we can get through next week without a drop we may be poised for an epic summer rally but we are gathering up our cash to target a new group of stocks (one of which was Google but they went and jumped the gun) that we expect to do well in the next leg up.

You've got to love the Nasdaq bounce we got today but I doubled down on our QQQQ puts at the close as I consider it cheap coverage (and we didn't break 2,550):

As Happy points out, we have great chart action on the Nasdaq and the S&P and the Dow is starting to look like the Hang Seng.  HPQ gave us some solid numbers after hours to hang our hats on for tomorrow but I was happy that the early gains in the markets came without commodity participation.  If we start seeing real signs of rotation then I will be able to get bullish very quickly but let's see how we do at the 13,500 mark before we bet the farm on 15,000:

That's right – the Dow has no red boxes!  That is truly amazing but I wish the SOX and the Russell would have joined this party.  I also don't like it when the Dow (up .77%) out gains the NYSE (up .62%) but it's not a real worry unless it becomes a trend.

The NYMEX made an amazing recovery at the close to finish the day at $62.55, up .55 off the day's low of $62 in the last half hour of trading.  I shouldn't care because I dumped almost all of my oil puts but it's still disgusting that this kind of blatant manipulation of a critical resource is allowed to go on day after day after day and the Republicans can only get concerned that a San Francisco water redevelopment bill MIGHT benefit property the Speaker's husband owns over a mile away from the water (along with San Francisco's other 300,000 homeowners).

Do we blame the oil companies as COP, VLO and Alon each shut down production yesterday as gas prices fell?  Do we blame the energy traders and their "analysts" for perpetrating this fraud on the American people?  Do we blame Criminal Narrators Boosting Crude?  Do we blame the politicians for doing nothing?  Do we blame ourselves for voting for these idiots?

I blame us.  The premise of this oil "crisis" is that we are too dumb to save energy unless the President puts on a sweater and personally tells us what to do and, sad though it may be – it's true.  The laws of supply and demand can be bent by shutting down a plant here and there and fudging a few inventory reports but they can't be broken, not even by Rent-A-Rebel.  If we stop using 20M barrels of oil a day then the 20M barrels of oil a day that are available to us will become cheaper.  This is a very simple concept but unfortunately falls under the "Somebody Else's Problem Field Theory" which is all well and good for small things but spending $1T a year more on oil than the $40 per barrel it's worth is really the whole world's problem (except for the people who are charging us and the politicians they support, of course).

The beauty of an overcrowded crisis-ridden world is that you can steal $166 a year from every man, woman and child on the planet and get away with it, as they all have bigger threats (current code: yellow) to worry about.  That's why the commodity boys are so hot to invest in water and why your municipal water supplies have been underfunded for the past 20 years – it's the next bull market – charging you for water is almost better than charging you for oil.  We can only look forward to the opening of the first oxygen factory but for that plan to work they'd have to do something truly insane like destroy the ozone layer and mess up the climate on a global scale…