As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
Global Market Comments
September 4, 2013
Fiat Lux
Featured Trade:
(WHY I?M KEEPING MY OIL SHORT),
(USO), (SCO),
(A COW BASED ECONOMICS LESSON),
(ON THAT TESLA RECOMMENDATION), (TSLA)
United States Oil (USO)
ProShares UltraShort DJ-UBS Crude Oil (SCO)
Tesla Motors, Inc. (TSLA)
Let?s call this the weekend of love. On Friday morning, we were looking forward to a long weekend of missiles raining down on Syria and the regional conflagration that would follow. The price of oil reflected as much, with west Texas intermediate trading all the way up to $112.50.
Then the British Parliament voted against their country?s participation under any circumstances. President Obama then dropped a bombshell of his own, asking congress for a resolution approving military action. He made this request of the least productive congress in history, one that rarely approves anything, whose sole mission is to oppose and embarrass Obama in all circumstances. Flocks of doves were seen circling the capitol dome. The next print for oil was $106.
Obama?s move is entirely political and very clever. He has put the Republicans in the uncomfortable position have having to vote against military action, something they have been clamoring for over the last two years. The sole exception here is the libertarian wing of the party lead by Senator Rand Paul of Kentucky, who opposes all wars for cost reasons.
More importantly, constitutional law professor Obama is setting an important legal precedent here, requiring a congressional declaration of war on this, and all future, military actions. The United States has not declared war on anyone since it did so against Japan in December, 1941 in the wake of the Pearl Harbor surprise attack. Every war since then, and there have been more than 20, has been solely at the discretion under the cover of the War Powers Act. Of the last 23 years, America has been at war for 14 years without any official declaration. The president is not only asking for belt and braces support for an attack on Syria, but also placing the legal handcuffs on all future warlike presidents.
My short position in oil through my bear put spread on the United States Oil Fund (USO) has certainly given me a roller coaster that I had not bargained for. I sold it expecting that the turmoil in Egypt has peaked for the short term. That assessment turned out to be correct. Then we got confirmation of the poison gas attack, something you don?t want to hear about when you are short oil. Only Israel?s missile test today is preventing oil from falling further, fast. Welcome to the oil market.
After the weekend?s action, the oil market has entirely backed out the Syria gas attack. I was sure we were in for a quiet weekend, as there was no way that the US would attack with UN inspectors still in Syria. That would be rude beyond belief. I was definitely paid for my beliefs. My loss on my oil short was pared back from hair raising to moderate. Better news was the gains I scored in my yen and euro shorts, which both collapsed on the dovish news.
So what to do about the (USO) from here? I think that congress will eventually vote for an attack, providing Obama with the fig leaf he is demanding. Oil will spike again when the missiles eventually fly. But with the congressional sand now in the works, that could take weeks, or even months. In the meantime, my options position in the (USO) expires in 13 trading days. So at this point, I am inclined to hang on, run out the clock, and sing anti war ballads until then.
When we do get the next spike in prices, I will sell short again in double the size. Now that the summer is over, the actual supply/demand picture for oil is terrible (click here for ?Why I Sold Oil). Wall Street is holding a record long in the futures market, which will soon come to grief, once the news flow from the Middle East slows.
I am inclined to do so with outright puts only, instead of a put spread to maximize my short-term profits. I may also buy some of the ProShares UltraShort DJ-UBS Crude Oil ETF (SCO), a 200% short fund that profits from falling oil prices (click for the link for the website http://www.proshares.com/funds/sco.html ). I think that the final end game here is for Texas Tea to grind down to $92 over coming months, a prolonged move that an ETF is better disposed to profit from. A 20% drop from the top is certainly something worth taking a bite out of.
SOCIALISM -You have 2 cows. You give one to your neighbor.
COMMUNISM -You have 2 cows. The State takes both and gives you some milk.
FASCISM -You have 2 cows. The State takes both and sells you some milk.
NAZISM -You have 2 cows. The State takes both and shoots you.
BUREAUCRATISM -You have 2 cows. The State takes both, shoots one, milks the other, and then throws the milk away.
TRADITIONAL CAPITALISM -You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income.
ROYAL BANK OF SCOTLAND (VENTURE) CAPITALISM -You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more. You sell one cow to buy a new president of the United States, leaving you with nine cows. No balance sheet provided with the release. The public then buys your bull.
SURREALISM -You have two giraffes. The government requires you to take harmonica lessons.
AN AMERICAN CORPORATION -You have two cows. You sell one, and force the other to produce the milk of four cows. Later, you hire a consultant to analyze why the cow has dropped dead.
A FRENCH CORPORATION -You have two cows. You go on strike, organize a riot, and block the roads, because you want three cows.
A JAPANESE CORPORATION -You have two cows. You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk. You then create a clever cow cartoon image called a Cowkimona and market it worldwide.
AN ITALIAN CORPORATION -You have two cows, but you don?t know where they are. You decide to have lunch.
A SWISS CORPORATION -You have 5000 cows. None of them belong to you. You charge the owners for storing them.
A CHINESE CORPORATION -You have two cows. You have 300 people milking them. You claim that you have full employment, and high bovine productivity. You arrest the newsman who reported the real situation.
AN INDIAN CORPORATION -You have two cows. You worship them.
A BRITISH CORPORATION -You have two cows. Both are mad.
AN IRAQI CORPORATION -Everyone thinks you have lots of cows. You tell them that you have none. No-one believes you, so they bomb the ** out of you and invade your?country. You still have no cows, but at least you are now a Democracy.
AN AUSTRALIAN CORPORATION -You have two cows. Business seems pretty good. You close the office and go for a few beers to celebrate.
A NEW ZEALAND CORPORATION -You have two cows. The one on the left looks very attractive. The one on the right is very nervous.
Will the person who bought Tesla shares (TSLA) on my recommendation last year at $30 please email me? I was traveling in Europe over the summer and lost your email address. I would like to get a testimonial from you. The stock hit $173.70 today, and is up 580% from your cost, making it the top performing US stock this year.
With the money you?ve made you can probably buy a Tesla now. I recommend the high performance Model S-1 with the upgraded sound system and the 270-mile range. I have one, and they are to die for. It?s the only car I ever bought where the specifications keep improving every month with each automatic software update. Or you can wait until next year and by the four-wheel drive SUV Model X. I am on the waiting list for that one.
You owe me.
?No one is line dancing over the fact that the market is at 1,630. No one feels good about it. The market likes to climb a wall of worry, and the mason has been hard at work. So I think we continue to grind higher,? said Jason Trennert, chief investment strategist at Strategas Research Partners.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
