NOW it's getting interesting.
We got our big Wheee! on oil overnight to $96.37 (/CL) with the old contract (/CLN3) at $96.11. If it weren't a scam, then why would the August contract fall just because July is expiring today. In fact, wouldn't the Aug contract be more in demand from rolling while the July is selling off? But no, they go down together to make sure the NYMEX boys can do those rolls as cheaply as possible to keep the scam going another month.
Sorry to go on about this but I've decided to make more people aware of what's going in in the hopes that, someday, one of you will happen to talk to someone who matters and something actually gets done about this stuff. In fact, my article yesterday was refused by a syndicator yesterday (who shall remain nameless for the moment only). That has only happened once before and also when I was critical of the oil scam. They're owned by VCs now and who knows what their agenda is. Just another example of the top 1% taking control of the media while the sheeple have the illusion that they're reading a "free" press.
After being down around 1.5% yesterday, the Futures are down 0.75% this morning (7:30) and a decelerating decline is not so bad so we'll see if we can escape with this minor correction but I'm pretty confident in my Dow 15,000 prediction for today – the Futures have already failed it at 14,940. 14,900 should be some support, as should 1,600 on the S&P and 966 on the RUT but the Nas has already failed to hold 2,937(/NQ), which was S1 in the Futures. If they don't get it together by the open, that could indicate another 1.5% drop today. I already sent out an Alert to our Members with levels we can play to the upside (and Tweeted here) but, so far, all we're doing is weak bouncing off the big drop.
Asia, which we were already concerned about, is down 2.5% across the board. Keep in mind, that's the 5% Rule as it's very hard for major indexes to fall more than that in a day and they were, generally, saved by the bell.
Europe's majors are all down 2% at the open and any time you have lock-synch moves like this you know someone(s) very big simply hit the SELLSELLSELL button on their TradeBots and we're having what they HOPE is a controlled descent. That's why you see these cute little stepping patterns on the way down – that's how computers sell. God help us if those programs aren't getting us out fast enough and the humans start selling – those guys are prone to panic!
The Dollar is way up at 81.2, from 80.50 pre-Bernanke so that's about 1% of the damage caused by the Dollar so, again, this sell-off is not as bad as it looks and, so far, controlled by Bots. The Euro fell back to $1.32 but held that so far and the Pound bounced off $1.54 but that was 2% down from $1.57 pre-Fed. Somehow, the Yen managed to get weaker and is near 98
Japanese Trade-Off – Devaluing the yen will hurt consumers in an aging society.
The Nikkei itself officially fell 230 points and closed at 13,014 but, after hours, the Futures jumped back to 13,400 in that giant charade they call the Japanese stock market. This is a new thing so I'm not quite sure what to make of it but it does seem to indicate that we're not likely to go too much lower without some new shocker.
Keep in mind, Bernanke didn't touch QE, he only answered a question and essentially said that, yes, if the economy rapidly improves more than expected then it is possible to end QE earlier than expected and that's what spooked the markets which, as we well know, are only this high BECAUSE of QE. Dave Fry sums it up nicely:
Today’s Bernanke presentation was confusing and could be a movie like Bedknobs & Broomsticks. What he acknowledged was that QE’s got to end sometime. As he indicated, there are “thresholds” that need to be crossed which “could” lead to “triggers” which would then begin to taper QE. His stated view was that tapering could begin in the last quarter of 2013 and QE could end by the middle of 2014. This is all dependent of course on general economic data as the Fed wants lower unemployment at 6.5% or lower, and inflation higher at the 2% level. In any event, the Fed does not expect to raise the Fed Funds Rate, currently .25%, before 2015.
Since the last week of May, the idea the Fed would start tapering or reducing QE sooner rather than later had already affected bond markets by raising overall yields. Bond vigilantes ignored Bernanke's message and sold bonds even harder on Wednesday after the announcement. Ultimately the Fed can fix their rates at .25% but bond vigilantes in the open market can take charge and push yields higher. Then the Fed loses control.
That’s about all I can make of it now.
Can't argue with that.
As long as the Dollar is over 82, it's not a good spot to be bullish but oil over $96.50 is now playable bullish but with very tight stops under (/CL) and gold has collapsed to $1,300 and that $1,300 line is an obvious place to go lone (/YG) and, because AAPL is down at $420 and should be bouncy there, I like /NQ long off that 2,922 support but all of these with very tight stops until we see the Dollar break back down or Europe perking up (now down at 2.5%, which is almost a day's limit per the 5% Rule™).
Keep in mind we're only long here to lock in the nice gains with the long Futures plays as we have been very short in our regular positions, especially in our aggressive Short-Term Portfolio.
We had a lot of good discussion in the morning chat (after the Alert link) about TLT, SCO behavior, oil Futures lines, the rise of Skynet (just Tweeted that one), the bottom for gold and, where we are in the cycle (as discussed with ZZ), which is:
Cycles/ZZ – I think, in the larger term, we are stabilizing from the big crash but, unfortunately, stable should be around 1,450 on the S&P, not 1,650. This is like if you pull a ship underwater in the bathtub, down to the bottom but it's full of air (stimulus) and you let it go and it rises back up and, in fact, goes HIGHER than the surface of the water. That's where we are now, because the ship went back to the top and even higher – people are extrapolating that the ship can now fly. That's the difference between TA people and Fundamentalists in a nutshell.
Frankly, I think that the end of QE, once the initial shock to the system wears off, will be just what we need to get the economy going as people with savings will begin to get a return on their money and banks, who are sitting on virtually all of the money the Fed has been printing, will finally be forced to actually LEND some of that money out to generate their own income. Once that massive pile of freshly printed money finally begins to move through the economy, we can hopefully get into a more virtuous cycle.
We're in fantastic position for today and we'll see how far this correction takes us but, if we hold those rising 50 dmas (and the NYSE takes back 9,300) then there's nothing very bearish about yesterday's drop and we'll quickly cash in our short-term short plays, buy a few more longs and ride this roller coaster back up (and it's a good time to re-read "5 Great Trade Ideas: 30 Days Later" as those trades were very, very good to us last time we played for a dip reversal and we're likely to go back to that well if we hold these lines.
Now, let's go have some fun!
