At 1 a.m., in member chat, we were discussing why the market was selling off 1% but by 5 a.m., we had rallied the futures back above yesterday's close causing me to say to members at 5:33:
The euro itself is up 1% to 1.352 but not the pound and the yen is below 77 so still time for all this to reverse again and we’ll be back to where we were last night (down 1%).
Nas Futures are my favorite short (/NQ) at 2,365 with a stop at 2,371 and that’s $20 per point so be very careful. Oops, silly me – oil (/CL) is my favorite short at $99.50 with a stop over that line.
We caught that move pretty much on the nose and the Nasdaq fell right back to that -1% line at 2,340 for a $500 per contract gain in less than an hour and oil came back to $98.60 for a $900 per contract gain by 6:10. That was enough for our morning drive to McDonald's AND a tank of gas so congrats to all the early risers and we really had it all this morning with the 3 a.m. trade working like a charm followed by the double dip we caught at 5:33 and now we have a silly bounce back (8 a.m.) but, so far, not high enough to get us excited about shorting again.
We left off yesterday with plenty of short positions from our afternoon member chat - JUST IN CASE we had a repeat of last Wednesday's 400-point drop. While we didn't expect such a violent move (caused last week by Belusconi's resignation which was, a day later, turned into a good thing - see "Whipsaw Wednesday - Yawn!"), we did think yesterday's rally was just A BIT overdone (see David Fry's chart) and, since nothing that has happened overnight has changed that outlook, perhaps some of the following trade ideas from yesterday's member chat at 3:21 will still be playable this morning:
- Google (NASDAQ:GOOG) $625/620 bear put spread at $3.10 is a nice downside play – figure risking $1 to make $1.90.
- 3M (NYSE:MMM) $82.50 puts are $1, also a good trade for a crash tomorrow.
- Wynn Resorts (NASDAQ:WYNN) $130/125 bear put spread at $1.90.
- Exxon Mobil (NYSE:XOM) $77.50 puts at .21 are a fun play too.
- Still shorting oil (/CL futures at $99.90 at the time) is my favorite bet at the moment.
That short bet on oil is a great chance to stick it to the pump crew at the NYMEX, who are doing their best to fake demand for oil near $100 a barrel. My premise is, if they are willing to pretend to want to buy oil for $100, then we should be more than happy to sell it to them. There were, in fact, 143,659 open contracts for December delivery to Cushing, OK, as of the NYMEX close yesterday. Those contracts terminate on Friday. Cushing can handle, at most, 40M barrels in a month so, at a minimum, 100,000 of those barrels have to be canceled or rolled over the next three sessions. Since the strategy by the oil crooks at the NYMEX has been to leave less than 20M barrels for delivery to Cushing each month (creating an artificial shortage of oil in the weekly inventories and robbing the American public of hundreds of billions of dollars while our elected officials do nothing - aside from accepting hundreds of millions in pay-offs from the oil industry to look the other way, of course), we can assume there is a need to dump 120M barrels of oil over the next few days.
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This is a fantastic opportunity to observe the workings of an actual criminal conspiracy to defraud the American people in action. Those December contracts represent 143,659,000 barrels of oil that we have locked in for delivery. This would give us a MASSIVE surplus of oil into the holidays and would provide enough oil to withstand a complete disruption of all imports (even Canada and Mexico) for two full weeks any time next year - it's national energy security right there in front of us and you will see, over the next few days - how it is stolen from you in order to gouge you at the pump for another month.
How much gouging? Rex Tillerson of XOM himself said that oil prices would be $60 to $70 a barrel without this speculative manipulation of our oil supply. He said that in May and I called for an investigation then but, of course, nothing happened and Americans have paid an average of $25 per barrel MORE than the head of the world's largest oil company says we should be paying for the 20M barrels a day we consume for a total RIP-OFF of $500 MILLION PER DAY or $15Bn per month or $180Bn per year.
But that's just the cost of a barrel of oil. At the pump, you pay $3.50 per gallon and in a 42 gallon drum that's $147 per barrel - almost DOUBLE where it should be. Then there's the pass-through costs you pay for heat and electricity and food and a host of other products that are derived from oil - all told, this NYMEX scam is costing the American people over $500Bn a year and, globally, we're talking about a $2.5 TRILLION crime (see my 2009 article: "Goldman's Global Oil Scam Passes the 50 Madoff Mark!").
THIS is what is crushing the global economy. We did not used to spend 10% of our $60Tn GDP on energy products. Under Clinton, oil was in the $20s - Bush's deregulation of the industry and destruction of the CTFC sent energy prices not just in California to stratospheric levels courtesy of Enron but globally prices rose from less than 3% of the global GDP to over 10%. That's over $4Tn that were taken away from other sectors to be spent on a commodity we literally burn. We don't get more production out of a $100 barrel of oil than we did out of a $25 barrel - our family car doesn't go farther on a $50 fill-up than it did when a fill-up was $15 - we simply have $35 less to spend at the Mall once we get there.
But NO ONE in the MSM or, of course, our government talks about this problem because they are filthy and corrupt and in the pockets of Goldman Sachs and the Energy Industry, which is slowly but surely taking over our world governments and ratcheting up the cost of necessities like food and fuel and medical care until there isn't any room left for discretionary spending - just a life of wage slavery for the average American as they try to just make enough money to keep up with the inflation in the very items the Federal Reserve pretends don't exist.
Even as I write this, oil (/CL) is hitting $100 in the futures (9 a.m.), spurred on by T. Boone Pickens' special guest spot on CNBC - even as the markets continue to turn sour on the fundamentals of a global slowdown caused by austerity measures and weak demand that is NOT going to turn around any time soon. Globally, we are consuming less oil now than we did in 2008, when oil bottomed out at $45 a barrel yet $100 is the bid this morning and I say TAKE IT! Offer to sell those barrels for $100 (a short position) on the assumption they can be bought at a later date for less money to fulfill your obligation.
My advice to President Obama, who has 720 million barrels of oil in the Strategic Petroleum Reserve, is to sell all 143M barrels worth of "demand" for $14.3Bn and then simply refuse to buy the contracts back. Then you will see those prices plunge to $95, $90, $85 and $80 a barrel very quickly as the absolute WORST thing that can happen to these energy traders is that they would be forced to actually put 143M barrels of oil on the market into historically weak December demand. Imagine a WEEKLY build of 35M barrels in our inventory reports for the month of December - what would that do to prices?
Yet the entire reason oil prices are at $100 now is because the CRIMINALS at the NYMEX, who wear badges to trade for Goldman and the Morgans and, of course the Koch Brothers - are FAKING demand for 143 million barrels of oil in December that, AS OF THIS FRIDAY, they will cancel. It's a scam and the scam is being played on YOU - even if you are in the top 1% - YOU are being robbed every single day - don't you think you should do something about it?
Send this post to your favorite crooked Congressperson and tell them we're on to them! Let them know that we are as mad as hell and we're not going to take it anymore! Let them know they can no longer line their pockets with money that the Banksters and the U.S. Energy Cartel picked from yours!
I don't have to tell you things are bad. Everybody knows things are bad. It's a depression. Everybody's out of work or scared of losing their job. The dollar buys a nickel's worth; banks are going bust; shopkeepers keep a gun under the counter; punks are running wild in the street, and there's nobody anywhere who seems to know what to do, and there's no end to it.
We know the air is unfit to breathe and our food is unfit to eat. And we sit watching our TVs while some local newscaster tells us that today we had 15 homicides and 63 violent crimes, as if that's the way it's supposed to be!
We all know things are bad - worse than bad - they're crazy.
It's like everything everywhere is going crazy, so we don't go out any more. We sit in the house, and slowly the world we're living in is getting smaller, and all we say is, "Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials, and I won't say anything. Just leave us alone."
Well, I'm not going to leave you alone.
I want you to get mad!
I don't want you to protest. I don't want you to riot. I don't want you to write to your Congressman, because I wouldn't know what to tell you to write. I don't know what to do about the depression and the inflation and the Russians and the crime in the street.
All I know is that first, you've got to get mad.
You've gotta say, "I'm a human being, goddammit! My life has value!"
So, I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window, open it, and stick your head out and yell,
"I'm as mad as hell,
and I'm not going to take this anymore!"
Disclosure: I am short USO, DIA, MMM, GOOG, WYNN, XOM.
Additional disclosure: Positions as indicated but subject to change.