As we expected, the Futures are off about 1% this morning and down about 3.5% on the Dow, S&P and NYSE since Thursday, the 19th, when we told you to ignore the Fed rally and the painted charts and focus on the FUNDAMENTAL ISSUES that were going to drive the market lower. I also had some opinion about what to do with the new oil contract, saying right in the morning post (where even the free readers could see it):
Oil shot back up to $108 on the new October contracts (/CLX3) and we shorted them in Member Chat this moring and already caught a very nice $500 per contract ride down to $107.50. Tomorrow is the last day the October contract trades (/CLV3) and there are still 79,243,000 fake barrels on contract and, if they were actually delivered to Cushing, OK next month, the US would have a 15-20M barrel PER WEEK build in inventories and prices would plunge.
That, of course, will not happen. What will happen is that the 79,243 fake open orders for October will be rolled into the already 331,304 fake open contracts for November to make it look like we have this MASSIVE demand for oil when, in fact, less than 20M barrels will actually be delivered in October, November and December in order to make it LOOK like we have a scarcity of oil in this country.
It's a con, plain and simple. It is the criminal manipulation of the energy markets in order to overcharge you for oil, and petroleum products – screwing you and your family out of thousands of Dollars each year but please – don't write your Congressmen – just continue to be a good little drone and pay the criminals. That's the American way…
Of course, most people just short a few contracts but still, making $18,000 or $30,000 or $60,000 in 11 days is pretty good, right? We also shorted USO and went long on SCO (the ultra-short oil fund) for those who can only play stocks or options and even the stock made 5% on USO and 10% on SCO while the options on them have almost doubled up already (the good side of leverage!).
The next morning, also totally for free in the Morning Post (and Emailed to you pre-market at 8:30 am in our daily PSW Report to our Members) I had several ideas to short the market as we maxed out our overbought levels on the NYSE McClellan Oscilator (90), saying: "This stuff isn't complicated folks, it's just physics." Our FREE trade ideas were:
- IWM short at $107, now $106 – up 1%
- Russell Futures (/TF) short at 1,070, now 1,063 – up $750 per contract
- TZA Oct $22/25 bull call spreads at .96, now $1 – up 4%
- FAS Oct $80 calls short at $1.55, now 0.30 – up 80%
When you are able to make 50% on a 3% move in an index on your insurance plays, you only have to commit a very small amount (5% or less) to offset losses. As I often say to members, hedging your portfolio with trades like this can be better than cashing out because you don't have the friction cost of getting in and out of positions and, if you are using our "7 Steps to 40% Annual Returns" system, then leaving your positions open means you are MAKING money on your short premium sales and that pays for your insurance.
IN PROGRESS