First, the good news:
We did it again at the NYMEX, calling the crooks out in yesterday's morning post and followed up with my alert to members, which was posted over at Seeking Alpha and on our Facebook and Twitter pages but not on StockTwits so those guys missed out on yet another billion dollar opportunity (which I predicted we would get on the 9th) as we once again called a huge move in oil with my 9:50 alert to members saying:
Europe is down half a point and we are up half a point so something is bound to give. We’re not quite getting to $99 in oil so we have to be patient and wait for a break below $98.50 to re-short the futures (/CL). On USO puts, roll up or DD on Aug and I’ll be liking the TOMORROW $39 puts at .50 on the assumption we get a bit of a sell-off after the nat gas inventories at 10:30 (as they tend to hold up hope until then).
At the time, we had 185,000 NYMEX contracts to work with so plenty for everyone and, as per our June 1st plan to break the NYMEX speculators by using their own crooked game against them (because God knows the government does nothing) this is a PSW trade idea we share with everybody. And why not - they gang up together to screw the American people - it's only fair if the American people return the favor by calling their bluff.
We called their bluff right on schedule at the 10:30 natural gas inventory announcement and as you can see from this intraday chart of our beloved /CL oil futures, it was a slam dunk for our futures players as well as our option traders, who picked up 250% ($500 turns into $1,750) in just four hours. That's a nice day's work, don't you think?
Even a (yawn!) stock trader could have done well as USO plunged from $38.70 to $37.20 (4%) right on our schedule but we were after bigger fish as those 185,000 NYMEX contracts took a $647,000,000 hit so plenty of profits on our side to share for all of our readers and THAT is how you punish the speculators - with the only thing they do care about in this world - money! We can stop the con game by playing the con game so congratulations and thanks to all the wild and crazy people who participated in this experiment in social engineering, something I like to call profit with a purpose!
As David Fry notes in the above weekly oil chart - you cannot make this stuff up but, as we noted in yesterday's post - CNBC makes stuff up all the time. Their blatant misrepresentation of the facts should be a dream come true for a clever class action lawyer. If we can get Uncle Rupert on the ropes, why not focus on the next cog in the great misinformation machine and begin getting back to an actual free press in this country that's dedicated to truth, justice and the American way (or is that Superman?).
I already sent out an alert to members at 3:58 this morning warning them NOT to short oil as were into the weekend now. We went long yesterday off that $95 line in member chat with a bullish USO play so we're happy to let the speculators pump it back up into the weekend and we'll get 'em again at the top. Isn't this fun? We also had long trade ideas this morning on S&P Futures (/ES) over the 1,305 line (now 1,310, up $250 per contract so far) and the Dow Futures (/YM) over the 12,400 line (now 12,420, up $100 per contract so far) so we can afford to pick up coffee and bagels before the market opens (we don't risk gains into 8:30 data) and we're waiting for that so we can make our IMAX (NYSE:IMAX) trade (bullish at $28 with a complex spread). Like the Marines, at PSW, we do have more trade ideas before 6 a.m. than most newsletters do in a week!
The data we were most concerned about this morning was the Empire State Manufacturing Survey at 8:30 which SUCKED last month with SUCKED not being a strong enough word. Franky, if this one heads lower, we are in DEEP TROUBLE. On the bright side, last month was so terrible (-7.8) that a flat performance will spark a relief rally. We also have CPI at 8:30 and our core PPI was up yesterday, sending gold to all-time highs AND we have Industrial Production and wages, which will highlight the plight of the American worker as they work more hours for less money – which is GOOD for Corporate America (and what else in life matters?). Michigan Sentiment is at 9:55 and that may be an upside surprise depending on what oil was doing when they took the survey (we had that nice dip last month). On the whole, Michigan Sentiment has been pretty bad though:
Click to enlarge
8:30 Update: CPI came in -0.2% on the headline but, like the PPI, up 0.3% on the core and that, my friends, is INFLATION and inflation means you can kiss your QE3 goodbye unless the Fed is truly hell-bent on destroying the world (probably 60/40 odds on that). You can tell this inflation is the evil kind of top-down inflation I have been warning about since QE1 as the Empire State Survey shows ANOTHER 3.76% decline so manufacturing in the New York region down 11.55% in June and July - is this a bullish premise by even a stretch of Jim Cramer's imagination?
Still, it's options expiration day and ANYTHING can happen but our easy bullish premise is shot but we had a nice chance to reload on the spike down on the data and now we'll have to see how high the pumpers can take us into the open. With this data, we are much more likely to flip short if we have a good rally now unless Obama says something truly amazing at his 11 a.m. conference. We also have the EU stress-test at about 11 a.m. EST (4 p.m. London) and we're thinking it's not going to be pretty or they would have announced it before the markets closed, don't you think?
So we are now officially in take the bullish money and run mode with tight stops as we head into that 9:55 Consumer Confidence (or lack thereof) Survey but first, we get Industrial Production at 9:15 and we resort to the old axiom there that a scared worker is a productive worker so we should get another nice number out of that one before the potential bad news from the consumer front.
9:15 Update: Oops, Industrial Production was up just 0.2% vs. 0.3% expected and Cap Utilization is off 0.2% as well! It looks like that Empire Manufacturing Index is picking up on a nasty national trend. We got very good earnings from GOOG and C but they don't manufacture anything so let's not get too excited about that so it's back to cashy and cautious into the weekend and we'll play the ball as it bounces next week!
Have a great weekend.
Disclosure: I am short BXP.
Additional disclosure: Positions as indicated but subject to change.