Well that didn't take long, did it?
On Tuesday I suggested selling into the day's rally, saying: "so it’s back to cash as we wait for the crash" and it wasn't a very long wait as the Greek euphoria wore off quickly and there was nothing from yesterday's FOMC statement (see member chat for details) or Bernanke's press conference that was supportive for the bulls. In fact, I sent out a member alert on the Fed statement right at 12:38 warning: "Dollar poking back over 75 but little reaction overall but this is bearish with the Fed recognizing inflation in their changed language (no QE3)." That led us to grab the QQQ weekly $55 puts at 12:39 for just .30 and they finished the day up 55%.
Of course we had to shake off the fake rally first as the markets topped out around 2:20 but, fortunately, we called that right too as I said to members: "Fake rally – Sure, what do the minutes say that is bullish? The Fed recognized that inflation is taking hold, they do not intend to extend QE2 and they are downgrading their view on the economy. WHERE’S THE BEEF?" In that comment we also hit the SCO July $46/50 bull call spread at $2, selling USO Aug $35 puts for .96 for a net $1.04 entry on the $4 spread. With USO taking a dive today (but just down to $36.50), SCO should be flying well over $50 - see how that works?
Of course our real play of the day was my morning call to short oil again as it tested the $95 line. At 2 p.m. in member chat, ahead of The Bernank (and again at 2:31, while he was speaking), I reiterated the futures short to members at the $95.50 line and we got a drop all the way to $94 last night but it didn't stop there and this morning we're down to $92.50.
I don't advocate holding oil futures overnight so we'll just call that a $1.50 win on 345,000 contracts for $517.5M of potential gains so congrats to those who got their share (at a rate of $1,500 per contract!) as we continue to stick it to the bastards at the NYMEX by calling their bluff when they pretend to want to buy barrels for inflated prices.
We added the SQQQ July $26/29 bull call spread for $1.25 at 3:32 and a bearish spread on Chipotle (CMG) but that was all as we were already pretty bearish with the DXD July $17/18 bull call spread at .60 from Tuesday Morning's Alert to Members along with an IWM weekly $80/78 bear call spread at .48, SQQQ July $27 puts sold for .75 to pay for the $29/32 bull call spread at .70, UUP July $21 calls at .43 (a bearish bet on the market). The only long play we took on Tuesday was the Research In Motion (RIMM) weekly $25 calls at $1.90 which, of course, we took off the table - getting back to cash on the bull side by the day's end, as planned.
Click to enlarge
On Monday, we had gone with the TZA Jan $40/50 bull call spread at $2.25, offset with the Boeing (BA) Jan $60 puts at $2.15 as well as DIA June 30th $119.75 puts at $1.18 but we did take long plays on Adobe (ADBE) and Verizon (VZ) as well as our "FAS Money" trade, which should be pretty much on target. So you can see how we "roll with the changes" - on Monday we were willing to play both sides of the aisle but Tuesday morning we saw weakness so we killed the short-term long bets (we're still long-term bullish) and began layering in more and more bearish plays - leaving ourselves (as I said we would be in yesterday's post) THRILLED with this sell-off.
Today we'll see if we can hold 3 of 5 of our -2.5% lines, which, as I said in this morning's member alert, would give us a signal to take a few more bullish plays. Almost certainly the Nasdaq, NYSE and Russell will fail at the open but if the Dow and the S&P can hold it together, we may get another little bounce. But we're going to be VERY cautious until we see a clearly bullish breakout now but some quick bullish plays if the dollar is rejected at 76 could be fun this morning. Meanwhile, we're once again in what I call a "Bugs Bunny Market," where the retail investor is Elmer Fudd and Bugs Bunny is Lloyd Blankfein and his Bankster Gang of 12.
Speaking of Banksters, the Conservatives were loving it when Nick Sarkozy won the election in France because he was a "business guy." But he's still a French business guy, which means, unlike most American Capitalists, he might actually care about people. Sarkozy is a smart enough businessman to know where to point the finger and he told the G20 Ministers yesterday that the food price surge is a plague that needs their IMMEDIATE action to reign in speculators.
“Volatility is a plague on farmers and consumers,” Sarkozy said in a speech to the ministers yesterday. “It can plunge entire populations into famine and poverty.” A lack of transparency in agricultural markets is exacerbating price swings, threatening economic recovery and food production, Sarkozy said. “We have to act, and act together,” the president said. “The world is watching you. A market that is not regulated is not a market, it’s a lottery in which fortune smiles on the most cynical, instead of rewarding hard work, investment and the creation of value,” Sarkozy said.
Wow, can we elect him president over here? Why doesn't our president have the balls to stand up to the financial monsters that have hijacked our economy? Why do none of our elected officials have spines? Do you know who has balls of steel? JP Morgan (JPM), which used Sarkozy's speech as an excuse to team up with the World Bank(sters) to "offer" emerging markets $4Bn worth of hedges on agricultural supplies. While this sounds "nice," what they are really doing is trying to trick third World countries into locking in record HIGH prices for food at the top of a rally, just when Sarkozy is rallying global leaders to take a stand against exactly the kind of speculation JPM and the World Banksters are encouraging! Isn't that amazing?
If you want to make food cheap you can A) stop paying U.S. farmers not to grow it. B) stop turning 3 acres of corn into one tank of gasoline C) shut down commodity hedging by non-consumers (speculators). The argument that speculation provides liquidity is total nonsense - they trade 6 BILLION barrels of oil per month at the NYMEX and end up delivering 30M barrels to Cushing, OK - that's a 200 to 1 speculator to consumer ratio! If each churn of a $95 barrel of oil ONLY cost 10 cents - that would still add $20 PER BARREL to the final price of oil - SPECULATORS MUST BE STOPPED - THEY ARE DESTROYING THE GLOBAL ECONOMY!
Sure we make plenty of money speculating ourselves but, as I outlined at the beginning of the month when I said "Let's Break the $peculator$" and made a public call for calling their bluff by offering to sell them oil at $103 per barrel - I prefer to play Robin Hood whenever possible and put the screws to the market manipulators by forcing them to put up or shut up when they run oil over our sell lines. I am extremely proud of whatever small role we may have played in contributing to the 10% decline in oil this month and I congratulate all our members and other readers who took action by playing along.
Click to enlarge
Jean-Claude Trichet says: "Risk signals for financial stability in the euro area are flashing “red” as the debt crisis threatens to infect banks. “On a personal basis I would say ‘yes, it is red,'" Trichet said late yesterday in Frankfurt after a meeting of the European Systemic Risk Board, referring to the group’s planned “dashboard” to monitor risks.
Meanwhile, Germany's Weder di Mauro, a member of the German government’s council of economic advisers, called a “tough” cut of Greek debt unavoidable in the long run, Reuters reported, citing a speech by the economics professor in Brussels. Because European banks couldn’t bear it, such a step isn’t feasible for now, and the current debt restructuring plans will help only to win time, the newswire cited her as saying. Di Mauro also criticized the fact that European banking regulators don’t include a Greek default scenario in their bank stress tests, Reuters said.
Update: Finally Obama shows some backbone and pulls the trigger - releasing oil from the Strategic Petroleum Reserve. In conjunction with the International Energy Agency in Paris, we will EACH be releasing 30Mb of crude - slamming the speculators dreams of a July 4th pump job as that should boost crude inventories, which are already kissing record highs! That sent oil down to the morning low of $90.32 so THANK YOU MISTER PRESIDENT! I think we're done here until oil fails to hold the $90 line - as I said, you can play oil up but we prefer to wait and see if we can get another opportunity to go short.
And did I mention - Wheeeeeeeeeeeeeeeee!
Disclosure: I am long DXD, SCO, TZA, UUP.
Additional disclosure: Positions as indicated but subject to change
