Philip Davis'  Instablog

Wholesale gas prices jumped 5% last night.

Goldman Sach's head of energy research, David Greely, has been banging the oil drums all month and has helped engineer a 10% rise in crude, costing Americans an extra $10Bn a month at the pumps and in their energy bills (not even including the rise in food and transportation costs) in order to make his masters another Billion on their trades but he's not done there. Now he is celebrating Brent Crude crossing it's 2008 highs of $124 a barrel by recommending long positions on September WTI contracts at $107.50:

Greely's main bullish premise for WTI is that one way or another, as Keystone was meant to do, they will find a way to reverse the flow of oil into Cushing, OK, where we measure our national inventories each week, and begin draining that facility dry at will. This will give the commodity manipulators total control over the price of oil by enabling them to add or subtract millions of barrels of oil each week and, if the Keystone project gets rammed past the White House - millions more can be drained from Cushing at the will of a single company.

It has long been the dream of the US Energy Cartel to force Americans to pay the same ridiculous prices as Europeans for oil, despite the fact that the US produces over 10Mb per day right here at home, more than twice as much as Europe.

Concerns of potential supply disruptions have increased as tensions between Iran and Western nations escalate, Greely said in a report today. Spare production capacity among the members of the Organization of Petroleum Exporting Countries has fallen to "dangerously low" levels at a time that the world's demand is recovering, Greely said.

"We believe that stronger-than-expected demand against limited inventory and scarce excess production capacity leaves the market vulnerable to price spikes in the near-to-medium term," Greely wrote. "Oil looks increasingly compelling from the long side both as an outright position and a hedge."

If this is giving you flashbacks to 2008, when Goldman Sachs stampeded their sheep into $140 oil contracts on the promise that the same conditions would lead to $200 oil - you're half right. The reality is that it's even more asinine now to make these statements than it was then…

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Tags: GS, USO

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Disclosure: I am short USO.

Additional disclosure: Positions as indicated but subject to change.

Why do we scream at each other
This is what it sounds like
When doves cry- Prince

It's no coincidence that this week we will be hearing from Fed Governors Kocherllakota(1pm Tues), Hoenig (12:30 Weds), Plosser (1:30 Weds), and Bullard (9:15 Thurs) ahead of our 2-Year Note Auction (1pm Tues), 5-Year Note Auction (1pm Weds) and 7-Year Note Auction (1pm Thursday) as the Fed needs to bring out 4 of it's 5 most hawkish members to talk up the Dollar (by talking down QE3) to keep those rates paid as low as possible for Treasury.

Once the Hawks drive the rates down and the notes are sold, the Doves will once again be released to talk them back up by extolling the glories of QE3 - completely reversing whatever was said before just as the Hawks will once again be called upon to reverse what the Doves say at a later date - when they need rates to come back down. The joke of it all is that traders will react to each statement, every time, as if it's a "game changer" and adjust their positions to reflect the new reality of the moment. It reminds me of a quote from Orwell's 1984:

As soon as all the corrections which happened to be necessary in any particular number of The Times had been assembled and collated, that number would be reprinted, the original copy destroyed, and the corrected copy placed on the files in its stead. This process of continuous alteration was applied not only to newspapers, but to books, periodicals, pamphlets, posters, leaflets, films, sound-tracks, cartoons, photographs - to every kind of literature or documentation which might conceivably hold any political or ideological significance.

Day by day and almost minute by minute the past was brought up to date. In this way every prediction made by the Party could be shown by documentary evidence to have been correct, nor was any item of news, or any expression of opinion, which conflicted with the needs of the moment, ever allowed to remain on record. All history was a palimpsest, scraped clean and reinscribed exactly as often as was necessary. In no case would it have been possible, once the deed was done, to prove that any falsification had taken place.

After all, what…

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Tags: AA, ABX, AMZN, BA, BTU, CHK, DMND, EDC, F, FAS, GDP, GE, GOOG, GS, HPQ, IRBT,ISRG, KO, MO, Option Strategies, PFE, SCO, SKX, SPY, SQQQ, SVU, TLT, TZA, XOM

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Disclosure: I am short DIA, USO, SQQQ.

Additional disclosure: Positions as indicated but subject to change.

Wow, just when we're trying to get bullish, they take away the punch bowl.

They almost had us yesterday, all they had to do was get that S&P over 1,359 and we were planning to join in with the crowd - but only as long as that line held. That's why we have lines, right folks? They help us to be DISCIPLINED so we don't let our "feelings" get in the way of our trading. We are NOT technical traders but you HAVE to respect the technicals simply because so many people are technical traders.

It's the same reason we force ourselves to watch CNBC - they move the markets. I wish they didn't as I can feel my brain cells dying as they speak but you can watch Bloomberg all day long and not one thing they say affects a stock but just last night, CNBC released the TBoone, who spouted off more of his insufferable BS about oil going to $125 and gave us another fantastic shorting opportunity betting against him at $102 (now $101.24). So how can we not watch CNBC - they are a counter-party driving machine!

But this is not about TBoone, or the elitist propaganda network - this is about tecnicals, about our Big Chart and our 10% lines and about the Dow, the S&P 500 and the Russell 2000, who all face critical tests today. The S&P is, of course, our most important index and not even AAPL could get them over our 10% line (1,359) on yesterday's silly spike in the morning. That led to (finally) a pullback in the markets and a nice test this morning of 12,749 on the Dow and 813 on the Russell. Holding those levels will be bullish but we already bet they'll fail in yesterday's Member Chat as we added a couple of aggressive short hedges to our already too bearish (maybe) collection, 10 minutes after I was able to glance over the Fed Minutes (2:10):

…

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Disclosure: I am long SQQQ, TZA.

Additional disclosure: Positions as indicated but subject to change.