“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput






Wednesday, July 2, 2014

Crude Oil Ignores Bullish Stocks Data

Once again we got another surprise in the crude stocks number as it hit the wires this morning. The trade was looking for a drop of 1.7 million barrels. Instead it got 3.2 million drop.

Crude oil had been weaker ahead of the data on concerns that Libyan oil exports might be on the rise but it rebounded when the EIA data hit.

Ominously, the market could not hold its gains and begin to retreat once again.

This price action is confirming my suspicions that the massive hedge fund net long position in the market ( a position that was drawn down somewhat in last week's COT data) is becoming more of a concern to players. When rallies are attracting long liquidation instead of a batch of brand new hot money flows, one has to be cautious.

Here is the chart.



As I noted yesterday, the market could fall down to the uptrend line and still maintain the bullish posture. That comes in near $103.50. It is also the 25% Fibonacci Retracement Level of the entire rally that began early this year. See the red ellipse....

The former resistance level, now turned support, near the $105 level, finally gave way today. Under normal circumstances, the loss of that level would portend lower prices. However, we have a big payrolls number out tomorrow and there is the possibility that if the number comes out stronger than what the market currently expects ( and it does look as if the market is expecting a good one - certainly copper does ) then we might see crude move higher on ideas that consumers are more likely to maintain strong demand domestically for gasoline as they head out for summer vacations. That plus the fact that economic activity might increase.

I have no idea what we might get on that volatile payrolls number but am just postulating a possible market reaction.

The flip side is that if the number is poor, crude could succumb to further downside follow through. We will just have to wait and see.

I will try to get some additional commentary up later today. It has been a very busy day....

A quick note - gold continues to struggle with this $1330 level. There has been a fairly rapid build in speculative longs in that market as well so the longer it cannot break through this current cap, the more the odds increase of some stale long liquidation. Again, it will be at the mercy of the payrolls data tomorrow.

It will be interesting to see if we do get a strong number, how gold reacts to it. Many will expect a strong number to pressure the price of the metal as it will lend credence of a sooner-than-expected tightening of interest rates by the Fed. It is possible however that some might see a strong number as a key ingredient to the inflation recipe. Again, I have no way of knowing how this market will respond.

Guess what - no one else does either, in spite of their reckless assertions to the contrary.


27 comments:

  1. Place your bets! Just saw a very interesting figure. The stock market puts out an avg rtrn of 16% 79% of the time after very bad gdp reports - go figure...

    ReplyDelete
    Replies
    1. That is a 16% avg annual return after really bad gdp showings...

      Delete
  2. The O&G companies seemed to hold together well considering crude was pummeled.

    Anyone know why this is? Whereas gold miners and bullion move together pretty much tick for tick.

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  3. Oil stocks are being reluctantly dragged up kicking and screaming with the S & P 500.

    Of course, any and all CRB Index rallies are capped and collared by TPTB, so only a matter of time before crude gets bombed by the Wall Street PigMen and the XLE and OIH could go into a full scale collapse.

    The OIH/USO ratio just hit a 5-year high.

    The XLE/USO ratio is at a fresh, new record high.

    So put another way, the oil stocks have never been so overvalued.

    On the other hand GDX/GLD ratio is still in bargain territory, still below the March 2009 lows!

    ReplyDelete
  4. The oil premium is very much a factor in Iraq and has kept a floor under the O and E companies. So don't you think there is a floor under them? Unless Iraq has some chance to resolve itself. Which I place at 1 in 100.

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  5. I'm starting to see some of the points made around here pertaining to Martin Armstrong. I wouldn't add him to the completely discredited like the majority of perma-manipulation dullards in the gold community, but the vaingloriousness in the way he presents his blog, and the way he has taken credit lately for things unachieved has opened my eyes. I've lost some respect for him and his acute dyslexia.

    ReplyDelete
    Replies
    1. I would agree with those thoughts John.
      He's interesting but needs to be taken with a grain of salt...and maybe some Tequila and a lime wedge. }:^)

      Delete
  6. This comment has been removed by a blog administrator.

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  7. This comment has been removed by a blog administrator.

    ReplyDelete
    Replies
    1. imho to protect this forum from those parasites, we may accept not real time publishing of comments but publishing after validation by the administrator. Otherwise those parasites will keep coming back more and more...

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    2. Hubert, they are like flies. They eat s - - t and bother people.

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    3. I am not sure it's worth Dan's time. Just read around them.

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  8. Only a matter of time before we hear of the Iranians doing the same thing.

    "Saudi Arabia Deploys 30,000 Troops On Iraq Border"


    Iraq is the middle ground between both.

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  9. The entire article...

    "Saudi Arabia deploys 30,000 soldiers to border with Iraq: al-Arabiya TV"

    DUBAI | Thu Jul 3, 2014 7:53am EDT

    DUBAI (Reuters) - Saudi Arabia deployed 30,000 soldiers to its border with Iraq after Iraqi soldiers abandoned the area, Saudi-owned al-Arabiya television said on Thursday, but Baghdad denied this and said the frontier remained under its full control.

    The world's top oil exporter, Saudi Arabia shares an 800-km (500-mile) border with Iraq, where Islamic State insurgents and other Sunni Muslim militant groups seized towns and cities in a lightning advance last month.

    King Abdullah has ordered all necessary measures to protect the kingdom against potential "terrorist threats", state news agency SPA reported on Thursday.

    The U.S.-allied kingdom overcame its own al Qaeda insurgency almost a decade ago and is wary of any encroaching new threat from radical Sunni Islamists.

    The Dubai-based al-Arabiya said on its website that Saudi troops fanned into the border region after Iraqi government forces withdrew from positions, leaving the Saudi and Syrian frontiers unprotected.

    The Iraqi prime minister's military spokesman denied the forces had withdrawn. "This is false news aimed at affecting the morale of our people and the morale of our heroic fighters," Lieutenant General Qassim Atta told reporters in Baghdad. He said the frontier, which runs through largely empty desert, was "fully in the grip" of Iraqi border troops.

    The satellite channel said it had obtained a video showing some 2,500 Iraqi soldiers in the desert region east of the Iraqi city of Karbala after pulling back from the border.

    An officer in the video aired by al-Arabiya said that the soldiers had been ordered to quit their posts without justification. The authenticity of the recording could not immediately be verified.

    Reuters.com

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  10. Good Morning, Dow 17000.

    Looks like the permadoomers are going to have to eat shit once again.

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  11. Wow impressive jobs report shattering expectations while the DOW smashes through 17,0000 just as gold gets crushed soon as Marc Faber opens his mouth that the boat has left the dock on gold - some things never change.

    Has anyone been around since the early 80's after gold topped at $875? Were the goldbugs this notorius for 2 decades during the entire bear market?

    ReplyDelete
    Replies
    1. Yes. Yes they were. A lot of the same guys too. Schiff. Casey. They never get tired of being wrong.

      Delete
    2. https://db.tt/9azs81o5

      That includes the general.

      Delete
    3. "The bear mkt in gold is absolutley over" - 1993?

      Bit confused who posted that - Johnathan Mergott? Isn't that Jim's buddy?

      Delete
    4. Jim sent that fax. The fax was posted by jonathan mergott on jims facebook fanclub group. Jonathans father subscribed to jims newsletter in the nineties. "Mr gold" called himself sr precious metals advisor and wrote a newsletter.

      Delete
    5. But why discredit jim like that. Wasnt J Mergott working for trx in pr?

      Delete
    6. Yes.

      "About Jonathan M Mergott Jonathan is a hedge fund manager and professional trader in the New York/New Jersey area. He also works as an investor relations consultant for Jim Sinclair and Tanzanian Royalty Exploration (TRX on NYSE Amex)"

      I think most people that worh for and with Jim know he is a fraud.

      Delete
  12. Greetings from lovely Warsaw, Poland.
    I won't trade while I'm there, it's really too hard to focus on anything here :)
    Have a nice weekend and independence day to those who are concerned...

    ReplyDelete
  13. Yep, its now official.

    New highs across the board.

    Anyone who "Stayed in the System" the last 5 years fully invested in Fed-sponsored, TPTB-backed financial instruments basically earned 20 years worth of returns in just 5 years.

    Any aggressive speculator who rode the Investor's Business Daily momentum names over the years got rich beyond their wildest dreams on stocks like NFLX, CMG, BLWD, TIF, etc.

    Basically anything and everything related to the "resilient consumer" outperformed.

    Those poor schlubs who attended the Q & A sessions and took their money out of the system, purchased TRX stock, and took direct possession of the stock certificates may never recover.

    Especially the blue hairs who are too old to start over.

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  14. Like I've stated previously...the fight for encircled Baghdad from within it is just as likely as an attack outside of it.

    My question to all would be....how many days will the "Seige of Baghdad" last once it starts?
    Tough call.

    'Iraq chases Baghdad sleeper cells as 'Zero Hour' looms over capital"

    By Ned Parker and Oliver Holmes
    BAGHDAD | Thu Jul 3, 2014 10:04am EDT

    By Ned Parker and Oliver Holmes

    BAGHDAD (Reuters) - Iraqi insurgents are preparing for an assault on Baghdad, with sleeper cells planted inside the capital to rise up at "Zero Hour" and aid fighters pushing in from the outskirts, according to senior Iraqi and U.S. security officials.

    Sunni fighters have seized wide swathes of the north and west of the country in a three week lightning advance and say they are bearing down on the capital, a city of 7 million people still scarred by the intense street fighting between its Sunni and Shi'ite neighborhoods during U.S. occupation.

    The government says it is rounding up members of sleeper cells to help safeguard the capital, and Shi'ite paramilitary groups say they are helping the authorities. Some Sunni residents say the crackdown is being used to intimidate them.

    Iraqis speak of a "Zero Hour" as the moment a previously-prepared attack plan would start to unfold.

    A high-level Iraqi security official estimated there were 1,500 sleeper cell members hibernating in western Baghdad and a further 1,000 in areas on the outskirts of the capital.

    He said their goal was to penetrate the U.S.-made "Green Zone" - a fortified enclave of government buildings on the west bank of the Tigris - as a propaganda victory and then carve out enclaves in west Baghdad and in outlying areas.

    “There are so many sleeper cells in Baghdad,” the official said. “They will seize an area and won’t let anyone take it back... In western Baghdad, they are ready and prepared.”

    A man who describes himself as a member of one such cell, originally from Anbar province, the mainly Sunni Western area that has been a heartland of the insurgency, said he has been working in Baghdad as a laborer while secretly coordinating intelligence for his group of Sunni fighters.

    The attack on the capital will come soon, said the man, who asked to be called Abu Ahmed.

    “We are ready. It can come any minute,” he told Reuters during a meeting in a public place, glancing nervously around to see if anyone was watching.

    “We will have some surprises,” ..... (cont.)

    Reuters.com

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  15. ESTE a nice oil play. Look at the Growth...

    ReplyDelete