Thursday – It’s the End of the Quarter as We Know It

June 30, 2011

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It's the end of the Quarter as we know it and we feel fine.

We feel fine because we cashed out on the long side (shorter-term, unhedged positions) and we really don't care what the market does today or tomorrow but we are betting this rally reverses and we will be taking some (more) short hedges today – hopefully selling into the last legs of this fairly fake-looking rally.

In yesterday's Morning Alert to Members we grabbed a short-term TZA hedge and I reminded Members in this morning's Alert about our Jan TZA hedge from the 20th that is, so far, down .50 and we'll be putting on a new Jan hedge on TZA (now $35.50) and probably EDZ ($17.90) as our primary hedges against a global melt-down over the weekend.

Of course, if we were SURE we were going to collapse next week, we'd go with the July spreads but we're only hedging for disaster, not betting on it – at least not until after we fail all our Must Hold levels!

The Nasdaq will be a key good/bad indicator this morning as they ran EXACTLY to our Must Hold line yesterday in a mighty 3-day, 3% move. Our bullish indicator would be the NYSE breaking over 8,280 – that will keep us a little bullish until our lines begin to break again.

We'd better be making market progress as the Dollar is down at 74.86 again, back at the early June lows. I didn't think they could take the Dollar below 75 but they hit 74.54 last night and it remains to be seen if they can hold it down in real trading, especially with the Pound weakness (see this morning's Alert) and the Yen's unwanted strength. Something's gotta give and we're betting it's this fake, Fake, FAKE rally….

First we'll have to see how far down they can push the Dollar this morning and then we'll see what kind of bump they can give the indexes, which need a whopping 2% to flatten out to last Quarters 5% up finish for the year. I'm sure that's what the Banksters WANT to see for today's close (just over our 1.25% lines) but that would be one crazy move on the day and it would have to be accompanied by a run-up in oil and gasoline that would sow the seeds for our economic destruction in Q3.

Already oil is back over $95 but we already made a nice bullish play in Tuesday's post on CLR as well as oil futures (/CL) off that $90 line (took the money and ran on oil longs yesterday) as well as Natural Gas (/NG) at $4.20 (which ran up to $4.37 at $100 per penny per contract) and, of course, our huge winner of the week/month was gasoline futures (/RB), which we nailed on Monday where we caught it at $2.7714 in Member Chat at 1pm and I reiterated that trade at 10 pm that night, saying to Members:

Dollar down to $75.66 now that Japan is open. Nikkei (/NKD) up to 9,690. Oil $91.22, gasoline rolled over but July contract (/RBN1) is still $2.829 while the new contract (/RB(Q1)) is $2.764 and that seems cheap going into the holiday…

I reiterated the position in Tuesday's post, saying:

Gasoline futures should be the most exciting play of the day as the new August contracts became the front-month this morning (/RBQ1) and I simply don’t see gasoline staying down at $2.764 so we were loving that for an upside play since last night’s Member Chat. Our expectations are simple – the Dollar topped out at 75.90 in overnight trading and we don’t expect it to get back over there (other than a brief spike) and, probably shortly before we open for trading – we expect some kind of announcement that will take the Dollar down and goose the markets – JUST LIKE LAST WEEK! Why change the play when it worked so well before?

Now I don't often post futures trades on the main page but this one seemed pretty damned obvious to me coming into the holiday weekend. Yesterday we hit our goal of $2.92 and gasoline flew up all the way to $2.954 before pulling back and is now trading at $2.9373, which is up 17.33 cents and gasoline (/RB) contracts pay $4.20 per 0.0001 PER CONTRACT so that's a profit of 1,730 x $4.20 or $7,266 PER CONTRACT in 3 days – not bad, right?

As I said, I don't make picks like that very often but banging into low support off a pumped-up Dollar run 4 days ahead of the biggest driving weekend of the Summer just seemed like a really logical bet – these are the kinds of trades we wait for and practice for the rest of the year so we are ready, willing AND able to commit when then time is right. Congratulations to all who played and let's not short-change those Nikkei futures (/NKD), which topped out at 9,895 last night, up 205 point from Monday's pick at a profit of $5 per point ($1,025) per contract.

We booked a little cash yesterday calling the NYMEX traders' bluff at $95 and shorting oil but we got out quickly into the close and we'll let them PUMP IT UP again today before we pile on again as we expect the holiday driving numbers to disappoint and, in case anyone forgot, 30M barrels coming out of our SPR will begin flooding the markets next week and I doubt that they can get imports much lower than they are now at 8.9Mbd, which is still down 400,000 barrels a day from last week leading to 2.8Mb of draw in yesterday's inventory report but was an excuse for yesterdays fake, Fake, FAKE run back to $95.

Compared to last year, imports are down a whopping 1.2 MILLION barrels per day. That's 8.4 MILLION barrels PER WEEK LESS oil being shipped to America yet our oil inventories are down just 3.5M barrels from last year. Think about that, the crooked, evil, scheming, manipulative bastards at the NYMEX and the Bankster crooks that fund them are shorting us at a rate of 436.8 MILLION barrels of oil per year yet the draw-down in US inventories over the past year is just 3.5 Million barrels. What does that tell you about the real demand for oil – not the BS you hear on CNBC who would NEVER show you these number – even though they are published weekly and are the most important thing there is if you are going to have an intelligent discussion about the oil market.

Is CNBC just completely inept at reporting the news and covering the energy markets or are they LYING to your face and involved in a conspiracy to create a false impression of the energy markets including completely misleading representations of supply and demand issues in order to extort (along with their co-conspirators) Billions of dollars in excess profits (ie. price gouging) from US consumers while, at the same time, committing investor fraud? We report, you decide – maybe they are just unbelievably stupid…

Oh well, I'm not going to demand an investigation or ask you to write to your Congresspeople because you never do. We'll just keep playing the ridiculous manipulation and making our money off it while the rest of America gets screwed and it does make me fell a little bit better about it to point out what a horrible scam the whole thing is because, MAYBE, one day, enough people will wake up to put a stop to this nonsense.

I hope so, because it's the kind of nonsense that is destroying our country – these people are TRAITORS – they are selling our Nation down the river in order to line their pockets. They lie, they abuse the power given to them by the FCC to broadcast and do nothing more than run a 24-hour infomercial for whatever manipulator pays their fees and they create an environment of fear and panic to generate ratings and, of course, to churn those accounts and generate fees for their sponsors.