Monday, February 28, 2011

Mid East Certainty (there's only one certainty right now)

While I'm not complaining, it's been sometime since my last post. Given the market's love of certainty, I thought I should finally chime in.

Sick or otherwise, I'm continuing to key the energy sector and the crude oil commodity - buying oil as dictators fall (or on rumors of their fall) and selling oil as chaos escalates. I sold oil Wednesday and Thursday, into the turmoil, but turned around and started scaling in again by later Thursday; as rumors of Gadhafi's death helped to knock prices down a quick 5%.

Mubarak's fall generated similar buying opportunities (2 or 3 in fact).

CNBC's Rolodex is getting quite a workout lately. By last Thursday they ran a story calling for $220/barrel oil, as emotions peaked, only to bring on analysts calling for $70 and then $60 then next day, Friday; as the price came in. Put me down then as a seller of $200 oil; a same-day buyer if I can get it down to 60.

And today, CNBC has flown an ace reporter out to Cushing Oklahoma, to discuss the current glut of US crude oil (the same story repeated several times throughout the day). There is plenty of oil out here. Oil should not be trading where it is right now. The price is sure to drop. Etc., etc., etc.

Give them a couple days. CNBC $220 oil might be topped before this week is through.

Seriously, uncertainty in the Mid-East has ratcheted-up the risk-premium in energy. This you know well. But while CNBC heads think oil will fall as Gadhafi falls (they're beginning to sense this), I would argue that Gadhafi's downfall is about the only certainty we can count on right now. The same was true during the second-half of the Mubarak drama. Outside of how and when he was going down, Mubarak's end was a certainty. Now, take Gadhafi out and what are we left with? Uncertainty. Pump your fists in triumph as he falls and allow 20-30 seconds for good feelings; then let the questions begin again.

I've got orders open now and I'm looking only to add to oil positions (and re-load oil futures) the moment Gadhafi falls. If he's immortal for 3 or 4 rumored deaths, I'll buy each along the way.

At least until this stops working.

Follow @Centrifugal to fade trades in real time

Total Position: Currently 1.27-1 net-short, 82% invested

Currently Long (according to size): ARUN (8.2%), DBO-Oil ETF (8%); OXY (8%); APKT (5.3%); LULU (5.2%); OTEX (5.1%)

Currently Short: Russell 2000 index via long-TWM, 15%; AAPL (reloaded today, 15%); FDX (reloaded friday 7.9%); DISH (reloaded friday, 5%)
...currently weighting TWM at 1.5 x's instead of 2 x's on net-long calculation.

Futures: no current position (in and out of May crude oil long, for several weeks now).

Thursday, February 03, 2011

Updated Position (more cowbell)

What's clear to me is - well, nothing is clear to me, but what I suspect is inflating the market in a virtual straight line still, is indicating tomorrow's prices (prices for everything!) will be much higher than currently considered.

Did that make sense? It doesn't matter.

Now, this doesn't mean you'll be able to sell your DJIA for any greater #shares of groceries in the future. The market could double in the next two years and you're eating from the same recycled bag. If you hold cash though, my conservative friend, you will eat cake instead.

Widows and orphans, fixed-income fossils...beware.

Ben Bernanke is pleased. He's running the biggest experiment in the history of economics and pleased about the lack of inflationary pressures. In fact, pleased came up often in his transcript today. Here was the most notable sample...
I am pleased to report, the release of tigers into the streets has been a significant factor in reducing the population of rats.
That's right, Ben is a man among nerds and rats are in shorter supply, thanks to Ben. The solution to the problem was easy. Never mind the paws ... Release more tigers!

If I appear bitter, well that's just my veneer. Underneath I'm warm and cozy. If all I need to do to make money is shut-up and buy, my job is one-way easy.

My last short covered was VMC after today's open. They missed badly on EPS and stunk it up then with guidance. If I'd have held that home run I would have been thrown-out trying to get to second (back to the dugout sucker!). LVS tonight has missed revenues and won't even take out the week's low. Yes, there are debacles here and there still (CSTR tonight). But more and more lately, a guy holding shorts is having trouble getting around first base safely, and he's risking his very TA to get there (that one would have left a mark on a few).

As I need to hedge going forward (and tomorrow's jobs report is the next potential catalyst), I will be jumping on the indexes, but not individual shorts (1-3 day infrequent trades aside).

Until Mr. and Mrs. Phil Bernanke's son can spell egg on his face, I'm done with individual shorts.

Follow Centrifugal to fade trades in real time

Total Position: Currently 100% net-long, 62% invested

Currently Long (according to size): WLT (reloaded today, 14.9%); CRM (reduced yesterday, 13.9%); APKT (reloaded today, 10.3%); BTU (added today, 10%); ASYS (reloaded today, 7.7%); CENX (4.9%)

Currently Short: no current position

Futures: no current position