Another nice consolidation day!
All in all, it was a very dull day as we laughed at the suckers buying oil at the top and tooled around with our AAPL callers (with pretty good timing!) but, otherwise, did very little as we watched the market try to make up its mind.
Trade Mike points our that oil seems to be forming an "Island Top Reversal" pattern which is what they call a "trend killer" in the TA world.
I myself, am more of a fundamentalist, as is our pal, Mahmoud Ahmadinejad, who had this to say about oil fundamentals at the opening of an OPEC meeting this morning:
""At a time when the growth of consumption is lower than the growth of production and the market is full of oil, prices are rising and this trend is completely fake and imposed. It is very clear that visible and invisible hands are controlling prices in a fake way with political and economic aims." Iran, the world's fourth-largest oil exporter, has repeatedly said the market is well-supplied with crude and blames rising prices on speculation, a weak dollar and geopolitical factors.
Geopolitical factor, Hank Paulson, was, in fact, in Osaka this weekend, championing speculation and a weak dollar as he blocked coordinated action by the G8 and forced a "study" (a favorite delaying tactic of the administration) on what is influencing the oil markets. “Financial investors don’t create trends,” Paulson said, adding that the fundamental problem is inventories are “very tight and there’s concern they will get tighter”.
This is, of course, total BS as oil supplies are high and getting higher in the US, DESPITE THE FACT THAT IMPORTS ARE OFF BY 800,000 BARRELS A DAY and, it just so happens that the US Senate already did an extensive study in 2006, which determined that speculators were responsible for 70% of the rise in the price of oil. Excellent articles on this subject were written by Ed Wallace (1) and (2).
Despite all the usual oil shenanigans, while the Dow finished lower, we got positive moves on every other index we track, including the Transports, who also laughed off the morning's wrong-way move in oil and finished right at the 2,550 line. FDX earnings are Wednesday and that will tell the tale for the Transports and we are in the Jan $85s despite the high cost of fuel, which we think is already priced in for the most part.
We have PPI coming up tomorrow along with GS earnings, Housing Starts and Industrial Production. Friday is the always depressing Philly Fed (and the NY Index was awful today) along with Leading Economic Indicators. Next week we get a Fed decision on Tuesday and the final GDP so crazy waters ahead…
We also have earnings from BBY in the morning and Wednesday we get FDX and MS, Thursday is CCL, CC, MESA and HRB at the end of the day. Friday it will be interesting to hear from WGO as I'm curious how people can even afford to drive those things off the lot. Speaking of which – it is interesting to know that demand for the Prius now exceeds supply and people are paying more for a used Prius than a new one. This is demand devastation folks!
"Prius owners can definitely make a lot of money if they are willing to get rid of their cars right now. But with gas over $4, why would you want to get rid of it?" Until a year or two from now, when manufacturing capacity is increased, the market for used Priuses may only grow. "Normally the standard in the industry is to have an inventory of 60 days' supply," said Toyota spokesman Wade Hoyt. "For the Prius our supply can be measured in hours, not days. As soon as we unload them off the truck, they're gone."
Toyota is currently constrained by battery production and is trying to get a new plant on-line this year and expects it to be up to speed in 2010. HMC rolls out the Clarity in the US in July – The FCX Clarity, which uses a lithium-ion battery, can go 620 kilometers, or about 385 miles, on a single fueling as measured by the Japanese fuel-efficiency test method, and has a top speed of 160 kilometers per hour, or 100 miles per hour.
