Thursday, March 10, 2011
Where is Oil Going From Here?
With chaos in the Middle East, gridlock in Washington, and continued contraction in state and local governments, can the price of oil go much higher without causing the whole sorry house of cards to come crashing down? Is this our black our swan? Who would pay the price politically were we to have a sudden and sharp turn for the worse?
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Moody's downgraded Spain's sovereign debt rating by one notch on Thursday and warned of further cuts to come due to fears that bank restructuring will cost more than twice what the government expects.
ReplyDeleteJust what we needed to decisively blow our 1300 line. With tensions on oil, and now sovereign debts back into the mix, that may make for a happy ending for this week.
Ah, and to our men who're gathering tomorrow in Brussels: bon appétit!
Bank of Korea Raises Rate to 3% as Prices Breach Target
ReplyDeleteInflation everywhere...
Worlds ending, unless your sippin a Green Mountain coffee.
ReplyDelete@greg,
ReplyDeleteFear of collapse. No promise of QE3! Lol.
ICan
Oil, like everything else, is going DOWN without the aid if QE3. Benny, your move?
ReplyDelete@ICan, I think the markets are not pleased that there was no ustream video of Charlie Sheen last nite. It'll take a while to digest this. Just hope another important country like Libya doesn't implode. I'm keeping a close eye on things in Liechtenstein.
ReplyDeleteWatch for Apple to hold $344.83 today, then we should get a replay of the Pixar movie...UP.
ReplyDeleteAnd to think I almost bought X on the close last night.
ReplyDeleteGM getting sucker-punched again.
ReplyDeleteWhy do I think we have the "perfect" stew brewing overseas and here at home for us to be looking up at that prior top for quite a while?
ReplyDeleteNew POMO schedule today?
ReplyDeleteICan
Mornin' folks!
ReplyDeleteWow - I can't remember when I saw so much red - and all at once too! Everything is down this morning.
ReplyDelete@Mannwich
ReplyDeleteYou're just too full of bear!
You just have to pick the right stocks!! My VXX is up big time today!
:-)>
This is fascinating.
ReplyDeleteCOPPER & COMMODITY MADNESS….
Warehouse sources report substantial volumes of copper inflows after the Chinese New Year holiday. A very small proportion of this copper has been sold to the domestic market so far. Chart 4 shows that Shanghai copper has been trading at a significant discount to LME copper since October 2010, reflecting pressure from increasing stock levels.
With more material available, trading firms have been diverting metal into finance deals and using copper as collateral. Copper tied to these deals will be released to consumers, but only when demand picks up more decisively. We estimate that roughly 550kt of copper was stockpiled in bonded warehouses in Shanghai in late February, the majority of which is tied to financing deals.
Again, how much of this run-up in commodities prices is due to China and the games they're playing? This is NOT going to end well, not well at all.
I have visions of the US as a creaky old dump truck puttering along at a snails pace while the Chinese are a shiny new Corvette flying past us at a hundred miles an hour on it's way to a brick wall.
Not at all, Rock! I've done quite nicely with some selections like RTN, SLV, TLT, and a few others. Sure, we may get more upside from here but overall I think the risk is too high (with likely limited upside) to be very long most equities in general right now. If we get a significant pullback, I'll turn bullish again though.
ReplyDelete@Thor:
ReplyDeleteGood morning!
I think the energy stocks are going higher before they go much lower. Today Bloomberg was saying that they're down because oil is down. I think it will be time to evaluate the downchannel that we are seeing, and the energy stocks are likely to break out first.
The one thing to remember is that the triangles of channel trends are skewed to the right. That is, the stocks rachet up slowly, but drop very quickly. (typical in bull markets). Now is the time to start evaluating individual names with relation to the whole market.
I havent' published the sectors' relative performance lately, but it seems that RTH is the best with regard to relative strength, but I shure wouldn't want to be in the retail sector right now. KOL is also holding well, IRET is fantastic. I'll run an analysis tonite and comment it out.
Even Gold is down today! Gold!!!
Rock - Excellent analysis. As you know I'm in your boat that the bull run continues after this correction is finished.
ReplyDeleteIf you want to put your work from tonight up for tomorrow let me know. Denise is out on vacation and I was going to throw up a music open thread ;-)
Manny said:If we get a significant pullback, I'll turn bullish again though. Same plan here. If we go down to 1230 AND it holds, then I'll be (virtually) buying the f****** deeps.
ReplyDeleteI'd like the week to close below 1295, that would open the way to further correction I think.
@Thor:
ReplyDeleteBloomberg had a vignette that showed some senator saying the Chinese government is running pirated software on 90% of its computers.
I have a fix for that.
Next release of windows, we remove unicode support and go back to 8-bit code. Runs faster, and the chinese character set won't fit.
Let NEC modify the source to run Japanese, just like they used to do before unicode.
I remember the big push to get unicode in was to support the Chinese market. Since they steal all the software, there is no market.
Whadda you think?
Also, even though I'm only virtually trading these days, I take this exercise very seriously. As mentioned before, I'm even more disciplined now than while I was blowing my real account the last 2 years.
ReplyDeleteBecause now I know the taste of cold steel;)
While I am in Mannwich's boat of "I think the risk is too high" I do clearly believe we are still in a bull market and will be for awhile.
ReplyDeleteBut rather then EVERYTHING going up EVERY stinking day, it is going to be like Rock is pointing out, certain stocks (Those that have real value) will be benifit most, while the weaklings get culled from the heard.
I am hoping that the next few months will allow some of the techniques taught here will come into fruitation.
Mutt
@Thor:
ReplyDeleteSure, I'll put up the "herds" post atain. But a music post would be nice, too....
Make that "again"
ReplyDeleteFor instance, I may nibble again on some SLV (sold half the other day) and GDX (still hold that one and now down a bit) at some point here.
ReplyDeleteRock - I am aghast, the Chinese would not steal software, when the could just as easily pay for it with stolen money....would they?
ReplyDeleteWhen I was still on the Rez, there were a lot of families who's kids needed computers and Microsoft products for their school work, yet they could not afford what Microsoft prices.
Because getting a good computer and Microsoft literally meant the difference between them achieving at school or failing, I had absolutely no problem pirating Microsoft products. But when word gets out, you tend to have people who only want to save a buck come knocking on your door.
For kids, I had no problem, for business - BIG problem.
I guess what I am saying is if the Chinese (Or anyone) are stealing for their personal gain and it is pushing the cost to others - Then yes, pull the plug on them and laugh while things crumbled around them
Mutt
For those "we are approaching a triple top" fans....I wonder if this is when it falls apart again? That chart is astounding.
ReplyDeletehttp://www.zerohedge.com/article/guest-post-fed-goldilocks-ignites-firestorm-three-bears-now-homeless
I should say those CHARTS (plural) are simply astounding. All about bubbles and busts. Nothing more. Get "rich" while you can and find the only door out before everyone else.
ReplyDeleteRightnow holding 50 day EMA on S&P - 1296
ReplyDelete"The SP 500 Dow Jones and the critical 50 day EMA held 1296". http://blog.afraidtotrade.com
ICan
These charts are such a feast for the eyes. Congratulations to the architects of this little meltdown (whoever they are). A piece of art, which (undoubtedly grande) finale we hope is still far down the road.
ReplyDeleteFrom Ritholtz.com/blog
ReplyDelete"Birinyi, Biggs, Fisher:buy year 3 of Rally".
@Rock,
See Betty Liu's comment in that thread's comment section.
Also,
"FusionIQ Market Review".
ICan
@I Can: Aren't those three always bullish?
ReplyDeleteFrom the Onion-worthy file...
ReplyDeletehttp://www.huffingtonpost.com/2011/03/10/fed-reports-finds-no-wron_n_834010.html
Seems to be hanging in the balance here?
ReplyDelete@Jeff(12:57)
ReplyDeleteYup!
But we still have 3 more months of POMO. So this sell-off cann't be too deep? No?
ICan
From the Guardian blog re MENA protests:
ReplyDelete"Saif Gaddafi threatens all-out war with Libyan rebels".
"Reports are coming in that police in Saudi Arabia used gunfire and precussion grenades to disperese a group of 200 protesters".
ICan
I think these kinds of things potentially trump POMO, no?
ReplyDeletehttp://www.zerohedge.com/article/saudi-police-open-fire-protest-rally
From L.A. Times:
ReplyDelete"Wary, but hopeful, Saudi dissidents gather weekly". http;//www.latimes.com/news/nationworld/la-fg-saudi-dissidents-20110310,0,7376971.story
"In the last few days, it(the Saudi govt.) has marshalled clerics, media, the foreign minister, and the interior minister to assert that public protest is banned in the kingdom, against Islam and will lead to chaos, claims that rights activist deny".
Blame, "foreign 'hidden hand', out to destroy Saudi State".
"We'll make sure they(the protesters) are isolated and put under control".
"Sixty lawyers, doctors, academics, and clerics are Saudi Arabia's leading opposition voices and many have been jailed for seemingly mild acts of protest such as letters, petitions, and calls to foreign journalists".
And their demands, " independent judiciary and an end to corruption".
Saudi Arabia looks like an oasis of freedom and democracy.
ICan
Rock - Huh, well that would certainly save the Chinese government money on software wouldn't it?
ReplyDeleteyeah, I think it's high time we start playing hardball with China. You'd think the damn Tea Baggers would be as focused on fighting Chinese Mercantalism as they are fighting their own fellow citizens. We're being robbed by China a hell of a lot more than we are being robbed by union members.
Powers that be don't want to rock the boat with China though, so it's pretty clear why there's no movement with their henchman on it.
Always good to keep an eye on China. For those interested in the Shanghai Composite Index, here's my humble updated analysis
ReplyDelete==
The index had a hard time today with the 3000 mark. Down 1.47% at 2,958.16.
Pattern: the index is forming a big symmetrical triangle, which first point is the low of October 2008.
Action:
*SCENARIO1 : it manages to break 3000 and find support here, it will have to show strength to break the upper triangle line passing at 3100.
*SCENARIO2: the index can't take the important 3000, then it's back to the lower triangle line (currently crossing 2650). A break of this line, thereby breaking out of the triangle on the downside, will look very bearish. Next support is 2650.
As if the record (yet again) monthly trade deficit wasn't evident enough of what "business" in this country is interested in. It's not helping out the American worker, that's for damn sure.
ReplyDeleteWe should note how there are boycotts in this country all the time. Against Glen Beck, Disney, Target, etc. No huge national movement to stop buying cheap, toxic, Chinese. . . wonder why.
ReplyDelete@Thor: We in the U.S. as a culture love NOTHING more than cheap (or FREE, even better) crap we don't need. That's why.
ReplyDeleteICan - it looks like the Saudi Police fired on those protesters :-(
ReplyDeleteEverybody have a look at the tick and trin. Looks like the number of advancing stocks is trending up over the last 1/2 hour, and it looks like volume is going into the decending stocks.
ReplyDeleteThe way I read that, is the dips are being bought.
AAPL and XOM are both off their lows. CENX is still in it's well-defined up-channel.
I'll bet we finish about -.75 on the SPY today. If that happens, I'm buying VXX again because I believe we'll see even more volatility (I was stopped out because I set really tight trailing stops)
JRCC has almost recovered it's gap. I'll bet it continues down regardless of the fact they are trying to buy market share.
SU has really pooed the bet, eh ICan?
I'll go read what Betty said now.
About the SSEC analysis above, note that I don't have access to the volume data. Since volume is one of my core tools, maybe I'm kind of "trading in the dark" without it.
ReplyDeleteHowever, I'm not sure if correlation between price action and volume is as relevant for indexes as it is for individual stocks. Just a feeling from the guts though, no rationale behind this.
Manny - True, very true. DOn't mind me, I'm just grumpy today :-P
ReplyDeleteAlso, can't forget that a large percentage of Americans can only afford to shop at places like WalMart anymore. Their disposable income is all gone, especially now with gas prices going up again.
I smell fear of the bears.:D
ReplyDelete@Thor:
ReplyDeleteWhen I was in the US, I had a Chrysler Hemi and went to the autoparts store to get some fancy aerated rotors and special metallic pads. The car parts guy told me that (then) he was hardly selling any of the cheap Chinese rotors and pads anymore.
When I go to the supermarket here, I see Chinese produce, but there are heaps of it, and the US lettuce and celery and Australia carrots and Malaysia bok choy bins are empty.
There was a sign on the Napa cabbage; here it's called "Chinese cabbage", but the sign said "Chinese Cabbage: Pasar grown in Malaysia".
(Pasar is a huge Malaysian farm co-op).
The Chinese better be doing everything they can to swing over to a consumer economy.
@Wolfstreet:
ReplyDeleteI checked the SPY. They roll their money into the stocks at midnight. So the trading you see going on during the day isn't exactly what the market does. You can verify this by overlaying the $SPX.X index with the SPY ticker.
@Thor and Manny: it's not just an American problem. People do just the same in Europe, or any other "advanced" countries.
ReplyDeleteOn techs specifically, it doesn't matter whether you have the money to buy "Made in US" or not, since there's no such products.
Rock - We make an effort in our house to not buy Chinese. As much for the shitty quality of everything they make, but I personally don't feel comfortable shopping my own country into oblivion. Silly I know, parts of things come from all over the world these days. . . still, it makes me feel like I'm doing a little something for American Workers.
ReplyDelete@Rock,
ReplyDeleteCan you invite Betty to comment here. Our comment meter will go up.
ICan
Wolfie - That's very true . . . that's still no excuse not to try ;-) There was a great new piece on TV the other night about how a "Made in America" label on something doesn't always mean what you buy is made in America. Sad. There's a web site you can go to (I'll try to find it) where you can see which companies, and what popular consumer items are actually made here, and/or what percentage.
ReplyDelete@Thor3:20PM: Maybe just a "drop in the ocean", but kudos for doing it.
ReplyDeleteRock - and good for you for driving an American car - even if only a small percentage of it is actually made here anymore. I've been driving my other half's Infinity all week and I must say, I prefer the drive in my Ford better!
ReplyDeleteWolfie - hah, yes, it's really more of an emotional thing for me, I know it's not doing all THAT much for the average US worker. :-/
ReplyDeleteEveryone hang on to your hats!! TIIIIIIIMBER
ReplyDeleteDamn, I know I have to slow down on the blogging stuff. But hey, a red day is rare enough an occurence not to spend it with my fellow bears (and bulls :D)
ReplyDelete@Rock3:16PM: thks. However...
ReplyDeleteYou can verify this by overlaying the $SPX.X index with the SPY ticker.
What is $SPX.X ? :s
@SPX: will ya stop playing with that 1295 line! give me that already and be gone!
ReplyDeleteHoly Crap!
ReplyDeleteHey there Denise. Guess who has just won having her name given to a new "out of town" indicator?
ReplyDelete@Wolfstreet:
ReplyDeleteTDAmeritrade calls the S&P index $SPX.X.
The ticker of the index fund or "ETF" they call SPY.
Looks like I'm not going to get my bet on the day's end, it went the other way. It wasn't 5 minutes after my tick/trin observation when the tick reversed itself and headed down.
Yikes.
ReplyDeleteCalling the PPT to pump things this evening ahead of tomorrow's open. Getting mighty jittery out there.
ReplyDelete@ICan
ReplyDeleteI truly wish I could get Betty to post here. I watched her interview that guy, and the message I walked away with was "stay and/or get long. I guess I have to stop doing work while listening to the pundits.
Nice little TLT pump there. Loving it.
ReplyDelete@Wolfie: I was thinking the same thing! The new Denise indicator in full effect.
ReplyDeleteCharlie Sheen is suing for 100 Million.
ReplyDeleteGosh, I shoulda sued that chick at the wet market for at least a mil. I mean, there's no reason I shoulda been slapped.
@Mutt:
ReplyDeleteI'm sorry to hear about the software and hardware. It's too bad you didn't go after the marketing cats, at Microsoft, for educational purposes, you could get Windows for 0.10 on the dollar, and I think Office was like $.20.
And hardware guys always had returns for refurbishment that they would donate to schools.
Rock - I am not sure if Microsoft has sales on thier software programs for Jr and Sr high students, it never occured to me to check, but if I were a thinking man I would have
ReplyDeleteIt was just easier to find a key and re-use itr.
The hardware was not a problem, often times I would pick up computer parts or the entire PC for next to nothing.
The computers were not good, but functional.
Mutt
Come on Rock a slap in the face is worth more then a million, heck just think how impressed Betty would be to not only see the red hand print on the side of your face, but your ATS (After The Slap)bank account.
ReplyDeleteMutt
Just an FYI - I went green today up 3%, now we are not talking really money, maybe enuff to get a cup of Starbuck's, so I can show those folks at TIF they can keep their free coffee (At least for a day)
ReplyDeleteBut because of how the market closed I kept my possition and will probably pull it out quickly in the morning.
But to sum up one of the first lessons, I learned here - "If you set your stops correctly, there is no reason to take a loss"
We'll see what tomorrow brings.
Mutt
Like I said, Onion-worthy. The Huffpost, which has this as it's headline, apparently agrees. Are they lurking over here at AT?
ReplyDeletehttp://www.huffingtonpost.com/2011/03/10/fed-reports-finds-no-wron_n_834010.html
Hrmm so let me get this straight - Manny and Denise cause the markets to collapse every time they go on vacation, while whatever country I visit usually has some sort of natural disaster or revolution.
ReplyDeleteI think we're our very own Black Swan!
Another Padawan@Mutt4:36PM: Good for you, little Padawan. ;)
ReplyDeleteHowever, when you state But to sum up one of the first lessons, I learned here - "If you set your stops correctly, there is no reason to take a loss": my understanding is you're referring to "trailing stops",ie the practice of adjusting a stop order periodically, to ensure the desired minimum profit on a green position ?
Because the other stop order for exiting, the stop loss, is a way of limiting your losses. But not avoiding them.
(correct me if I'm wrong on terms like "trailing stops", my translating skills for technical terms can be buggy at times)
@Thor:Lol. A bunch of black swans. Hope they don't open the witch hunt anytime soon!
ReplyDeleteManny - LOVE that headline. Where is Elizabeth Warren? Sick her on the banks!
ReplyDeleteMannwich -
ReplyDeleteA narrow scope used to define a hand pick list of foreclosures, that was conducted by the overseers of the group that is under investigation, does not really define an investigation; Does it?
Even if these banks were to be found in violation, they would only pay, fines UP TO $30 billion.
Isn’t this like the play ground bully who has harassed and stole the money of other kids, finally being called on the carpet for his actions, only to have the bullies parents define what harassment is then hand picking the kids who they want to question. And if the bully is found to have stolen, he will only have to give back the money in his pocket at the time.
3,000,000 foreclosures for 2010 and they only looked at 500 and of those only the ones that fit under what was defined as “wrongful foreclosure”
Millions of lives have been ruined by the way banks are running all over the laws of the land and we are supposed to take the word of the Fed’s – Who are the parents of the same banks that are breaking the laws.
Wow – Isn’t America great.
Mutt
Wolfstreet - When I first started trading, I never set stop. And even though Denise got all over me for this, I continued to not set them.
ReplyDeleteI knew she was right and that I had a greater chance of loosing money by not setting stops (And believe me I DID) but I wanted to get a first hand experience of what my market thought process was. And there was much I learned and lost by not listening to her (And others) advice, but in some ways, I think I have a better since of my (emerging) trading style.
I have stops set, but not trailing stops and this is also by choice. If the market opens well below where my stops are set, it wont matter that they were set them, so depending on where things are in the morning I may take my losses or profits as is, but if I have a profit I will probably take it and buy a latte.
My stops are currently set so unless I get blown out over night, I will at least break even, this includes the cost of doing the trade. So I am guaranteed not to lose any money, but may not make any.
Once I get the hang of that, then I will start getting a handle on trailing stops.
Trust me I am all about listing to the advise and learning from the mistakes of others, so anything you or anyone else has to say is great.
I am just trying to learn one lesson at a time.
@Mutt: ok. Great you're feeling like you're improving. Same here;) system trading taking shape, one step at a time. Thks in good parts to this blog. (and to cold steel of course).
ReplyDeleteI'll too try to pass on some knowledge (while keeping learning, that never stops), once I've grown my way to profits.
Ok off to bed. Good evening everybody. Tomorrow may be interesting:D
Poor NPR - Serves them right though. I find it shocking that "senior people" in ANY organization would be so stupid as to not know that everything they ever say, to anyone, has a very good chance of being recorded. I think getting off the government teat will be good for them though.
ReplyDeleteTrue enough, Mutt. Laws are for the little people to follow. I think that's obvious by now.
ReplyDelete@Thor: They'd probably actually be better off without Federal funding. Go it alone.
ReplyDeleteAgain, I repeat, Holy Crap.
ReplyDeleteWe are in for some trouble this spring as I have two more vacations planned, the end of March for 10 days (which is when the 2001 bear market started) and a trip in May.
We did get to see "The Adjustment Bureau" thanks to a rainy and cold afternoon, pretty good flick.
Manny - My thoughts exactly.
ReplyDeleteDenise, oooh, good, I've been wanting to see that. Battle: LA is of course first on my list this weekend. The aliens invade a mile from work!
The previews for the LA movie were incredible, the special effects were pretty good. Of course, we will have to see it in your honor!
ReplyDeleteAWESOME article
ReplyDeletehttp://www.marketwatch.com/story/brace-for-200-oil-if-unrest-hits-saudi-arabia-2011-03-10
Satyajit Das, a global finance expert featured in the Oscar-winning documentary “Inside Job,” and author of the forthcoming book “Extreme Money: The Masters of the Universe and the Cult of Risk,” believes that Riyadh is where the rubber is going to meet the road in the latest Mideast crisis.
For if the Saudis are not prepared to deal with the greatest challenge to their power in 60 years, he argues, the world economy will look very different by the end of this year than it does now. As pessimistic as the Sahara is hot, Das said he believes investors need to ask what crude oil prices north of $200 would do to global economic growth, and then make a column in their spreadsheets for $500 oil.
“I think we are entering a period of unparalleled political uncertainty,” he said in a telephone interview from Australia. “An arc of instability that starts in Morocco and ends in China is taking shape, and people are grossly underestimating its potential to radically upset the current world order.”
I'm also leaving town at end of march. Could that be the ultimate of "indicators"?
ReplyDeleteHah, we'd better watch out
ReplyDeleteThanks god for The Daily Show, it's good to know someone important is paying attention
ReplyDeleteManny,
ReplyDeleteWe are going to Colorado, could this be a double market whammy?
The DSSWich indicator may be in effect for the end of the month.
ReplyDeleteHmmmm How do I package this into an ETF or CDS?
Now THAT is where the money will be.
I hope both you all have a great vacation though.
Mutt
Mutt said:The DSSWich indicator may be in effect for the end of the month. : lol
ReplyDeleteDude, now talk about uncharted water! I'm passing the message around, although I fear it may be too late.
How is one supposed to build a shelter on such short notice!??
Playing the rebound, however brief, in the CAC40 (French index).
ReplyDeleteStrong bullish divergence on the 10min charts. I seldom trade divergences anymore, but sometimes they are just too screaming, as I think is the case here: MACD , RSI, stochastics , all 3 point to an imminent reversal.
Currently sitting at 3931 (-0.8%). I think such a change in the intraday trend will lead us to at least +0.5 / +1%.
==
Now of course, Paris place doesn't interest you, however it means we're due for a positive move in the US too, since American and European indexes always end up moving in the same direction.
Reminder: EU leaders meeting tonight in Brussels, to agree on a "competitiveness pact". Not sure what that means. Maybe it's a politically correct version of saying they're putting more cash on the PIIGS's account.
ReplyDeleteAnyway, investors have been warning them this week that they'd better show up with something relevant: we've seen 2 downgrades (Greece and Spain), and crazy yields.
Two-year Greek yields jumped as much as 38 basis points to 17.10 percent, the highest since May
German Bunds Rally on Spain Rating Downgrade; Greek Two-Year Yields Surge
On those good words, time for some real work now. See you all, and good luck.
ReplyDelete