Whee, that was fun!
We got the drop we expected but at 9:56, with the Dow down 80 poiints at 12,875, I said to members: "Well I dumped my QID calls so I guess I think this is a bottom, not sure yet though but a quick heads up to watch the callers!" We were already looking for the turn because right at 9:37, with the market plummeting our game plan was to take out our callers on the dip – we just didn't think it would only take 20 minutes to turn!
Of course my opening comment in the morning post was "I love the smell of pullback in the morning" and it's what our system is all about – we stay well covered (and we did cover up again at 2:07, with the Dow up 125 points from our bottom call) so we can take advantage of the market's irrational peaks and troughs.
We were so bullish yesterday we even day-traded XOM for a nice 35% gain. Our NYX went through the roof, finally breaking $70 but we covered as we became concerned about a pullback and the premiums offered were very high considering they expire in 7 sessions. FSLR was also a big day-trade winner but we got out too early, with "just" 37% profit, which is the problem with taking momentum calls on stocks you think are overpriced… FDX was a nice 50% profit on the day trade and the only other short-term trades we made went the other way with puts on COP June $85 puts at $1.75 and our old pals, the QID $38s for $1.90, looking for some overnight action ($2.40 target).
Sometimes we can go days without day trading and sometimes there is a new one every hour – it's just the kind of market we are in. While day trading can be fun and profitable, our bread and butter plays remain our spreads and the LTP made it's usual, steady improvement, picking up about 3% on the day with very little fuss.
I would have been more bullish on the market overall if oil wasn't creeping up to $121 as Criminal Narrators Boosting Crude pumped the GS "Super Spike" call at every station break and that doesn't bother me as much as the fact that investors swallow this BS as if it was really news BUT IT'S NOT! This is the EXACT SAME REPORT from the EXACT SAME GUY who said on March 9th that "$200 a barrel could be a reality in the not-too-distant future in the case of a "major disruption." At the time, this was used to push oil up over $105 and I guess it worked so well they bring it out again and pretend it's news 2 months later at $120 to break that barrier.
Are we really just the stupid lemmings that Media and their corporate masters obviously think we are? How is it possible that 2 full months later a major television network (who is owned by a corporation that makes tens of Billions of dollars on energy projects that wouldn't exist if oil were at normal prices) can recycle a story, treat it as news and not one "news" organization in this country steps up to question this nonsense.
Back on March 11th, I laid out my case for why oil cannot sustain anything near $200 and I stand by that. If you want to play this scenario, you are better off picking up the many cheap gold miners that are still out there than the insanely priced oil companies that are being peddled by Cramer and his pals at Fast Money.
Rather than get too far into it again, I'll leave off with this. Just look at one of the many sites or watch yesterday's Fast Money to hear the bulls lay out their case for $200 oil and why it's not too late to get in and compare that to this April 2006 article on why you should invest in the housing market:
"An influx of out-of-state families moving in and a tight resale home supply have put an increased demand on the local new home market. At the same time, builders have been struggling to develop enough finished lots, with the lot supply dropping to less than 18 months in the first quarter of 2006. During the same time last year, the lot supply was two years. Couple that dynamic with increasing interest from out-of-state investors looking to move their capital from slowing coastal markets, and what we see is strong competition for available land," Rude says. On top of the increases in materials costs since the hurricanes last fall, higher lot pricing will translate into escalating home prices for buyers in all price ranges as we move into late 2006 and 2007."
Wow – look at all those factors! How could anyone doubt the overwhelming evidence that this is just the beginning of a very strong market that will go on forever?
Let's not forget CNBC's "Realty Check" segments when they would regulary feature breathless real estate bulls telling you that NOW was the time to buy and, very interestingly, if you try to click on some of these old segments in the archives, you are now redirected to a other videos (try clicking on "Paradise in South Florida" and see what happens) – much like Cramer's show, CNBC seems to have fallen into the habit of rewriting history to make themselves right after the fact!
As with housing, the prices can become truly ridiculous before the bubble bursts so we will watch and wait. We covered all of our longer oil puts last week (thank goodness!) but the one thing I am sure about is Dow 13,000 and oil $130 DO NOT MIX! So let's be careful out there.
