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Trading Lessons

Manipulated Crude Oil Market Malarkey – Welcome Greater Fools!

Commodities / Crude Oil Jun 18, 2013 - 03:37 AM GMT

By: PhilStockWorld

Commodities

What complete BS the Futures are!

We started out last night, at 6pm, with the Dow Futures right at 15,000, flat to Friday's close. However, MIRACULOUSLY, by Asia's close at 4am, we were back to 15,130 (Friday's high) and you have to be high if you could read the weekend headlines we were going over in early morning Member Chat and thought that kind of move was justified! We concluded that oil futures (/CL) would be the best short at a ridiculous $98.50 so we called that line and, already, less than two hours later (8:17), we're back at the $98 line with $500 per contract profits! Maybe we should just take the rest of the week off and quit while we're ahead.


We're very happy to take the quick Egg McMuffin money in the mornings as we already have proper bearish bets on oil via USO and SCO positions we took in our virtual Short-Term Portfolio. Hopefully we'll crack back through $98 to $97.50 and lower as the pressure mounts on the NYMEX pump crew to unload the last of their 110M barrels worth of fake orders (down from 350M earlier in the month) before Thursday comes along and they would actually have to take delivery (which would increase US inventories and our energy security so the people faking orders at the NYMEX and then cancelling the contracts with no intention of buying oil are actually sort of terrorists).

No drones, however, will be sent to stop this scam as the multi-Billion dollar oil and banking cartel is behind it and every extra penny they can squeeze out of you at the pump is multiplied by 378 Million gallons a day in the US and 1.5Bn gallons Word-Wide so it's worth $150M for each dime and $1.5Bn for each dollar the NYMEX traders can con out of the American people and that's why you see an order strip that looks like this (one contract is 1,000 barrels) with just 3 days until July trading ends:

Notice they traded 32,416 contracts on Friday and managed to move about 12M barrels out of July. What's amazing is that, over the next 3 days, they'll cancel almost all of the remaining 110,656 contracts in order to create a massive, artificial shortage in the US, which will then be measured to determine the price of oil and gasoline you pay for the next month. This is FRAUD on a massive scale (see "Goldman's Global Oil Scam Passes the 50 Madoff Mark!") committed against every global citizen that buys fuel or uses petroleum products. Just 10% added to the gas bill of a typical consumer who uses 750 gallons a year is a way of these crooks reaching into your pocket and taking out $250 a year (per car!) from you and your family.

While it's all lots of fun for us top 10% traders at PSW – because we know what's going on behind the curtain and are able to make money betting on the crooked activity – You, the consumer, should be OUTRAGED! Because it's not $250 per car, it's more like $1,000 per car, an extra $1.30 per gallon that these people are stealing from you EVERY YEAR. That's after-tax, take-home money that won't pay for your kids' college or your daughter's wedding or your father's kidney. In fact, it's not even money that creates jobs – it's money that, for the most part, is sent out of the country, devaluing our Dollar (through trade imbalances) and, worst of all, FUNDING TERRORISM!

As I said, TREASON!!! Yet no arrests will be made. This scam has gone on since Enron loopholes allowed energy trading to be deregulated but Obama has done nothing about it. Not that Congress would support it even if he did, the oil lobby is the second most powerful in Washington, right behind Health Care, who run massive scams of their own – but at least Obama's trying to do something about them…

Of course, it's not just oil that's being manipulated but, other than our health-care stocks, we can't go long on medical care gouging (and there's always the looming danger that Obamacare may put a bit of a stop to that). As the probe of LIBOR spreads, it's also becoming apparent that the entire $4.7Tn/day currency exchange is being manipulated by the major banks, who are given all the leverage they need by the Central Banks to manipulate the markets at will. Bloomberg News reported that traders have manipulated key rates for more than a decade, citing five dealers.

“It’s happened time and again: all of these markets have been influenced by major market-makers, which is a polite way of saying they’ve been rigged,” Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, said in a telephone interview.

Market ManipulationThe International Organization of Securities Commissions, or Iosco, a Madrid-based group that harmonizes market rules, identified a set of benchmarks in a January report that could impair the global economy if they were found to be prone to manipulation. Along with Libor, ISDAfix and energy market prices, Iosco flagged measures used in markets for overnight lending and repurchases, equities, bonds and alternative investments such as hedge funds.

These are far from victimless crimes. As with energy and health care prices, distortions in foreign exchange markets have the potential to affect the buying power of consumers while manipulation of interest rate benchmarks could raise the price of homes, cars or any product purchased with borrowed money.

Whether you are outraged and want to do something about it or not (and you are free to send this article to whoever you want or WRITE YOUR CONGRESSMAN – HERE), you still need to be aware of the mechanics involved so we can make intelligent investing decisions.

For instance, on Friday at 2:33 in our Member Chat, we added 20 EWJ (Japan) July $11 calls at .35 ($700 total) to our Short-Term Portfolio in Member Chat. The logic was simple and had nothing to do with news – it was simply that the Yen had dropped (gotten stronger) to 94 to the Dollar and that's the point at which the BOJ likes to step in and manipulate the currency (weaken it). Since the Japanese exporters tend to rally on the weak Yen, we simply played the Nikkei to go up. At the time, Nikkei Futures (/NKD) were at 12,650. As of this morning, they're at 13,170 – up over 500 points from where we entered and that was good for $2,500 per contract on /NKD and should give us a lovely return on our EWJs as well.

We're not expecting much to happen ahead of the Fed (flatline at pumped-up open for 3 days) but, after that, it's anyone's guess what the manipulator in chiefs cook up for us. Meanwhile, as John Oliver pointed out last week on the Daily Show: Good News – you're not paranoid!

- Phil

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www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

© 2013 Copyright  PhilStockWorld - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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