Bulls Make Money, Bears Make Money, Pigs…

get slaughtered.

I find that whenever I get greedy and look to double my returns or make a killing in a trade is when I invariably take a hit.

Slow and steady returns can build a huge portfolio. For instance for a $20,000 portfolio,
$250/day * 22 = $5500 per month, $66,000 per year.

$250/20,000 = 1.25% return per trade putting the entire amount to work daily before commissions

Complacency – Meet Options Expiration

Monday was the lowest volume trading day this year. That bodes ill for bulls.

Today’s trading volume was far closer to normal in what turned out to be a consolidation day.

Complacency reigns amongst the bulls. Fear reigns among the bears. Something has to give.

For all intents and purposes, this has been a weak rally. Bull market rallies are usually on rising volume off troughs. That being said, the market has shown a capacity to absorb bad news exceedingly well.

Watch for increased volatility heading into option expiration. Probably starting tomorrow with the CPI number.

Our money is there will be a bias to the downside the next few days.

Perhaps 60% of Today’s Oil Price is Pure Speculation

Comment: The mosaic is being put together by investors that this oil story has nothing to do with peak oil. Rather, it is yet another bubble created by Alan Greenspan and his boom bust economy, and now being perpetuated by Bernanke with his weak dollar and low interest rates:

The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How?

First, the crucial role of the international oil exchanges in London and New York is crucial to the game. Nymex in New York and the ICE Futures in London today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil—West Texas Intermediate and North Sea Brent.

A third rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a daughter of Nymex, with Nymex President, James Newsome, sitting on the board of DME and most key personnel British or American citizens.

Read the entire story on Financial Sense

The Energy Non Crisis – Lindsey Williams

The Energy Non Crisis – By Lindsey Williams

My Old Haunt – Lehman is now predicting prices at $83 a barrel in 2009 and as low as $70 in 2010

Is $120 oil even real? Not if you ask the Saudis, or even Lehman Bros.

The investment bank’s oil expert said this week that the oil boom is due to bust. Economic growth across the globe will slow just as new refineries kick in, raising supply.

Recession or not, a U.S. slowdown will slacken demand sharply, right as new oil hits the market. “Supply is outpacing demand growth,” said Michael Waldron, Lehman’s oil strategist.

“Inventories have been building since the beginning of the year. We have pretty significant projects starting soon in Saudi Arabia, and large off-shore fields in Nigeria,” he said.

http://moneynews.newsmax.com/money/archives/st/2008/4/25/175710.cfm?s=al&promo_code=6231-1

Lehman is now predicting prices at $83 a barrel in 2009 and as low as $70 in 2010.

Although some years off, Brazil too has found as much as 8 billion barrels of light oil and gas offshore. The South American giant’s president says his country might well join OPEC when the Tupi field begins to pump, in 2011.

In addition, Middle Eastern sovereign wealth funds have pushed up the oil price by investing billions of their oil gains, ironically, in commodities index funds.

Now they could be looking to get out, warns Waldron. He figures the money effect has driven anywhere from $20 to $30 into the barrel price.

In addition, a weak dollar is holding oil prices high, according to a series of statements from OPEC leaders over the past week.

If you buy the views of OPEC’s various leaders, that’s at least another $20 of oil price that is not supported by the actual supply and demand situation.

In addition, Europe’s central bank seems bent on containing inflation there. A rate increase in Europe is sure to contain the euro’s rise against the dollar — if serious steps are taken soon.

Couple that with a lower-than-expected rate cut in the U.S. next week, or perhaps no cut, and the oil price drops as the dollar gains ground.

All this is having little immediate impact now, of course. U.S. gas prices at the pump hit $3.58 a gallon just as the summer driving season kicks off.

If nothing changes, analysts now expect gas to rise to as high as $4 a gallon in as little as a month.