Late night munchies (updated)

9:47 pm (Hawaii) Had another couple of very small losses today despite being up in one at an early point, and the fact that FAZ finished the day up off its lows didn't bring me any consolation. It finally fricking dawned on me: I've been trying to time breakouts (as was the case successfully last week) instead of simply, simply trading the ranges.

Yeah. It's that fricking simple. In hindsight, of course. We are now in the midst of all this PMI economic news across the globe, not that any of it changes the banking nightmare in the Western world. It's bad enough that one Mr. Fly, who has always insisted that the puppeteers will have no choice but to print en masse sooner or later, is cautioning against hero behavior in this wretched market.

Under a do nothing scenario, stocks will crash. Economies will grind to a halt and life as you know it will change. I am fairly certain, under a full retard scenario, the markets will close, possibly for months until shit gets figured out. They’d have to do this in order to avoid bank runs.
My advice to you: keep the majority of your net worth out of the market. It’s okay to play with stocks, since we all like to gamble. But it won’t be funny if your net worth gets halted for trading for 6 months, while you starve to death in your fucking Mcmansion. This advice applies to short sellers too. Your fantastic tailwinds will be kept away from your purse, if the markets go on holiday.

A bit more from Le Fly regarding the possibility of deflation:

This is as bad as it gets. The markets are tame because people believe QE3 or some bailout is around the corner. If we do not get either, bear with me as I prepare this next sentence: WE ARE GOING DOWN 5,000 DOW POINTS IN SHORT ORDER. 

Rumors that Greece cannot secure credit to buy oil, are running rampant, and have been forced to secure it from large European corporations, with onerous conditions. Spanish and Italian credit is in danger too, which is why oil is tanking so hard. See, boys and girls, that’s what deflation does. Credit is non-existant and money becomes scarce. Food, oil and basic materials will not be delivered.

Update 11:08 pm Business Insider reports that European markets and US futures are sinking because of the PMI data. An hour ago, futures were roughly -45. They're now at -81. But really, the more this teeters off center, the closer the market gets to a reprieve from the central banksters. Or not.

Josh Brown:

In 2008, with global markets in free-fall and the Beijing Olympics looming, the Chinese Ministry of Doing Whatever The Fuck It Wants pulled a stimulus package out of its ass so large that it represented almost 20% of the country's GDP. We're talking General Tso's Shock and Awe. 

And it did the trick - a little too well. Chinese real estate and infrastructure spending went banoodles, getting to the point where they were building ghost cities just to keep the machinery cranking and home prices greatly exceeded what anyone could actually afford to pay. The central government decided enough was enough and began to use policy to tamp down on the bubble. And things haven't been the same ever since.

This story in the NY Times is more than two years old, but already Spanish citizens were stuck between a rock and a hard place, unable to return to farm labor jobs. Like China, an unprecedented construction boom preceded the inevitable downturn in the economy.

Not a pretty place for the average joes of the world. Always getting screwed over, sure 'nuff.

Can Kevin Costner save BP?

Kevin Costner's oil-separation technology company has 32 orders for its righteous machines. Maybe they'll work. Does BP want to be saved? Don't they realize they can just "billion" the world many times over now that crude oil prices are rising again?




OK, Costner has a point. But seriously ...

Do you believe the Russians?

They say the floor of the Gulf is unequivocably fucked. Here's a story that reads quite legit until you glimpse at the home page and notice they also have links to stories about UFO sightings. Take that for what you like. But the Russians say the Gulf and our oceans may be dooooooooooooomed.

According to Sagalevich’s report, the oil leaking into the Gulf of Mexico is not just coming from the 22 inch well bore site being shown on American television, but from at least 18 other sites on the “fractured seafloor” with the largest being nearly 11 kilometers (7 miles) from where the Deepwater Horizon sank and is spewing into these precious waters an estimated 2 million gallons of oil a day.

Note that this story ran on June 10, before today's White House announcement that there are 60 million barrels of oil leaking out of the "volcano", not the previously estimated 35 million. BP, according to Matthew Simmons, is done by summer's end. Know that he's been wrong, like way out there, foul-ball territory wrong before. 

Visit msnbc.com for breaking news, world news, and news about the economy

Conspiracy reality?

Free market? Yeaaaah ... but more accurately, FOOD CHAIN. Give the inmates autonomy and the food chain will always surface. So maybe GS has the market under its thumb and is propping rallies to support four freaking IPOs this week. Sure. Happened before so why not now?

But is BP going to sink massively on a Reuters report that BAC will consider it untradable beyond 2011? Now Fast Money is saying the Fed has announced that it's not 35,000 barrels leaking out of the Gulf, but 60,000. This coincides with Obama's speech later today. All the info is leaking, pun intended, in a predictable pattern. Anyone long BP? You gotta be hedging that shit, please.

I look out my door and see a mountain flush with foliage. I look the other way and see an ocean of blue. I am blessed. We all are. Some blessings, however, just weren't enough for us and we had to go wreck them. Now I just hope our oceans can stay blue beyond the coming months. Maybe humans really are the scourge of the Earth.

We clearly cannibalize each other in the free market. Better to be higher on the food chain. Here's a look at most manipulated (by high-frequency machines) stocks and how to become your own high-frequency operation. Not that I'll be trying it...

Doomsday Tales: True or False?

You've seen them and I've seen them: countless doomsday videos starring conspiracy theorists are forecasting unimaginable catastrophe resulting from the BP Deepwater Horizon fiasco in the Gulf.

True or not, I'm going to "file" them here. In an ideal scenario, we can look back in a month or a year from now and laugh at the disaster that was brought under control. But more likely, we are going to pay for BP's fuck up in a very dear way. Florida evacuation plans. Crack in the Mississippi trench will empty the Great Lakes and kill millions. Yep, doomsday forecasts. At this point, who can absolutely rule out any of it? 

I don't know much about the theorists who insist there's an Illuminati and all that. But it's never dull seeing all kinds of questions be answered by a multitude of passionate theorists. YouTube is ripe and perfect for them. I think we can all believe one thing: BP lied their asses off. 

4:07 am Hawaii

Ah yes, the quiet of early morn. Dark skies, cool air and a lady on CNBC worried that the rest of the Earth couldn't hold the February lows. A technical analyst. I wonder if she's long or short the market, or neither. They should disclose that stuff and keep us entertained.

A good, fun time was had by all last night as old friends reunited. I had my fill and the result was an earlier than usual nighty-night time. But that also knocked me out through premarket despite the blare of my alarm clock. My small position in AAPL is slightly under water (263.34) now, but was north of 266 in premarket — during the first hour (7-8 am Eastern) when peons like me can't trade. After 2 am, when I could've traded (but was happily asleep), AAPL dropped below 266 and opened at 265.15.

Not surprising after yesterday's gains. Oil (USO) is flat, though BP is up 1.3% (38.19) somehow despite another drawback in the Deepwater Horizon disaster. Financials are flat, though C is up 2.5% (4.02). GS is down nearly 1% (143.62). Dollar is up fractionally (UUP 25.39) and the Euro is down a bit (FXE 121.77).

Last resort?

The nuclear option is upon us, or at least US. Bombing a leak like the one below the Deepwater Horizon in the Gulf might be a necessity. The Russians did it five times in similar scenarios. Four times the action worked, all with "small" nuclear bombs.

Spooky times, indeed, when a nuke is a solution to repair a problem caused by humans. Mother Nature cannot possibly have a good response. But what must be done will be done.

For now, British Petroleum is going to try another method, but really, there's proabably no way to stop this gusher other than the nuke. Isn't it odd and fascinating that we are getting toxic by air (Iceland volcano that I cannot pronounce or spell) and sea (man-made disaster)? The images are somewhat similar, really.

Looking ahead

Long weekend ahead and some planning is never a bad idea. Let the ideas churn.

Among the potential plays next week in a market that will be skittish (scaredy cat) at best or possibly cataclysmic (worsening of current crisis/crises or addition of new trouble spot), two stand out: Apple and British Petroleum. Apple's momentum is to the upside thanks to the iPad, which was just launched in Japan to hordes of customers, and the soon-to-be-released iPhone G4. The run from last week's low of 231 has been large for AAPL, which closed at 257 today. With a year-high of 272, AAPL has some room to play with, and if June brings some stability to the market — end of quarter can bring increased inflow that left after the Flash Crash ($9 billion left the market) — it could be the right play.

BP has no solution in sight. They've had vast success over the years with pioneering technology, but eventually, Mother Nature just said no. Now, with BP down to 43 after bouncing from 40 to 45 earlier in the week, where do shares go now? I'm not familiar with shorting individual stocks, but inverse oil/energy ETNs have worked. DUG (ProShares UltraShort Oil & Gas) closed up 4.1% at 69.08 today on decent volume (1.7 million shares). SCO (ProShares UltraShort Crude Oil 2x) rose 1.65% to 15.36.

On April 26, DUG was at 51.71. SCO was at 11.56. BP was 59.91 then, and closed today at 43.07.

Is there still room for gains in DUG and SCO? At this point, with BP a long way from any kind of reliable solution, of course. But most of the "easy" money has been made on the short side, clearly. There are at least two reasons, though, to believe this is far fro over and DUG and SCO are potentially decent plays.

1. Both BP and the White House underestimated — or publicly lowballed — the amount of crude bleeding out. The number may be as large as 19 million gallons per day, far higher than the earlier estimations of 5 or 12 million. This is relatively new info released in the past 24 hours. That impact is not fully felt in the stock of BP just yet.

2. BP has lost nearly $1 billion so far. If this problem isn't rectified for another month, or two, or three ... revenues continue to shrink and costs continue to spiral out of orbit. Worst-case scenario is BP is reduced to shambles and is bought out by another oil conglomerate. Best case is they find a temporary solution, or establish a relief well — the latter won't be ready until August at the earliest.

Whatever the scenario, the market is leaning on BP like never before.

Apple is what I know far, far better, and that's where I'll dip in and out. But as oil proves to be a multi-layered death trap for the US economy, I might try some SCO and DUG now and then. Just not today, and probably not next week.

[Update: Apple launched its iPad in London, too, to much mass indulgence.]

"Industrial Apple" wallpaper art by Stratification.

BP bounce? You can have it

The brave traders who rode BP's bounce from 40 to 45 in the past two days are staying on board, for the most part. BP hit a high of 45.57 today, closed at 45.38 and is at 44.66 after hours.

By tomorrow, British Petroleum is expected to announce whether its "top hat" method is a solution. BP traded 55.9 million shares today (so far). All in all, between the environmental disaster, absurdly incredible technological feats and failure(s) and bottoming of its stock, it's clear that all the pressure BP put on RIG to rush the Deepwater Horizon project (re: 60 Minutes) had everything to do with profits, losses and temporary insanity.

After all, an average Joe like me wouldn't and hasn't traded/invested in BP. Ever. I'd rather buy gold (GLD) or AAPL. Even SCO, an inverse crude oil ETN, has outperformed oil stocks lately. But BP is compelling, the Darth Vader of stocks today. I'd never say never when it comes to profiting from trades. But one question remains: If top hat is successful, even for just the short term, where do BP shares go from here? What's the next catalyst?

Perception is almost everything today. As long as blood spills out of Planet Earth — oil bleeding at the bottom of the Gulf — the video footage will pour wrath upon British Petroleum on a daily basis. My guess is BP tops out tomorrow and trends down again starting next week.

American Bulls, a candlestick charting site, called BP a buy today.

6-month chart (daily)

White Spinning Top pattern (bullish)

BP vs. SCO vs. GLD

3-month chart (daily)

BP vs. AAPL

1-year chart (weekly)

Crude behavior, indeed

USO (US Oil 32.17 -0.10 -0.31) continued to dip, while inverse oil ETFs climbed more.

• DUG (ProShares UltraShort Oil & Gas) up 4.63% to 72.44

• SCO (ProShares UltraShort Crude Oil 2x) up fractionally (0.40%) to 17.15

USO has traded up two of the last three sessions, which may indicate some form of halt to the slide in oil. UCO (ProShares Ultra Crude Oil 2x) was down 0.23% to 8.77.

The 1-year chart is somewhat favorable for USO ...

1-year (daily)

... but the 6-month chart shows the radical change in direction for USO, DUG and SCO

6-month (daily)

Freaked-out Friday

Dow 11,008 -158 (1.4%), Nas 2,461 -58 (-2%), S&P 1,186 -20 (-1.7%).

Greece, Goldman Sachs, Gulf oil spills. Market got toppy and barfed. All day.

DNDN held on to most of its gains and closed at 54.06 (day high 57.67), up 3.88 (+7.7%). FAZ up 0.82 (+7.2%) to 12.20.

Even NBG held on for a teeny gain of 1 cent to 3.26. All other financials bombed. Goldman Sachs cratered to 145.20 (-15.04, -9.4%). They're still in a zero interest environment like any other bank or financial. Come earnings day in a couple of months, GS will blow it out. But this isn't the time to get in, not yet. That day might be a move from 125 to 150.

So why do I hold BIDU and IMAX? I can withstand the near-term shelling. BIDU (688) will zig and zag until the next catalyst, but they're still the emperor and the only royalty in China search. Float is still scant until the split in few weeks.

IMAX had very little buying help today. I theorize that today was a pocket between earnings and the upcoming giant releases (Iron Man 2, etc.), and buyers held on to their recent profits rather than dive into a hellhole today. Smart. We're getting past a lot of heavy issues. The fog may clear by Monday. Or will it be Wednesday?

I would've been smart with proper execution on Thursday morning (premarket). But I forked up, missed my window. The selling opportunity was there before IMAX announced earnings. I was crashed out. One of the challenges of being in the middle of the Pacific and trading from 2 to 10 a.m.. I've stocked up on energy drinks since.

Today, BIDU was actually up to 716 and hovered at 710 while the rest of the market was in the early stage of tankage today. The spooky thing, of course, is that BIDU's gap up from 620 to 710 this week could get filled at some point. I don't believe all gaps necessarily have to be filled, though.

Bottom line is I'm holding both. It's like the old saying: sell early or not at all. They'll be back in spite of my crappy loss-cutting discipline.

AAPL (261.09, -7.55, -2.8%) shed all of its gains from Thursday and is tilting toward the bottom of its near-term range. If it can hold that 256 area, that's relatively cheap. Greece and Portugal and Spain might spin into economic chaos, but oil drilling issues are under a microscope. I don't see more spills coming with the global media and superpowers addressing the cleanup in the Gulf. The Goldman problem will linger, but they're in no danger of closing shop. There will be scrutiny, who knows, maybe a few convictions. But that'll bring discount prices, maybe bargain prices to the financial sector.

Citigroup closed at its low for the day, 4.37 (-0.19, -4.2%). That's normally a great buying opportunity at this level.

Monday will be intriguing for DNDN traders. Is there any short interest left after today? That'll provide us outsiders some entertainment value.

But the past few days have been a painful lesson in the importance of execution and staying in cash through market chaos. Opportunities in financials and DNDN were available this week. It's not about the specific stock; it's about timing. It's not who, but when.

My when has been forked up the past few days. We need someone or something to rescue this market.

Iron Man, save us.

No B.S. by Barron's

Back on February 24, I noted a Barron's story that feted oil companies that had interest in the Bakken Shale on the Canada-U.S. border. Not very big on this kind of stuff, I decided to start a mock folio to keep track.

Here we are, more than four months later, and four of the five stocks noted by Barrons are in the black since.

WLL | then 59 | now 102 | +72%
EOG | then 100 | now 119 | +18%
BEXP | then 7.13 | now 16.04 | +125%
CLR | then 25 | now 81 | +225%
MRO | then 51 | now 45 | -11%

Overall, on a weighted basis, this quintet of oil stocks are up a nice 86%. Amazing. Meanwhile, here in Hawaii, I paid $4.31 for a gallon of regular unleaded. That's the cheapest I found in urban Honolulu, aside from Costco.

#7 PetroChina

This is a double bottom?


Like CNOOC, I don't see PTR floundering for much longer, not with Big Brother's protection.

Barron's was right

You could hate Barron's. I know I have. But they were right about the oil companies that have their toes in the Bakken Shale near the Canadian border. Since Barron's ran its story a few months back, four of the five stocks are up significantly.

WLL
then: 59
now: 77
+ 30%

EOG
then: 100
now: 135
+35%

BEXP
then: 7.13
now: 9.22
+29%

CLR
then: 25
now: 45
+79%

MRO
then: 51
now: 46
-10%

The numbers don't lie.

China's fortune

For what it's worth, Fortune's David Kirkpatrick is the latest to echo the grand scale of China's free market revolution. As Jim Grisanzio points out, Kirkpatrick sees growth on steroids (my paraphrase) in the Middle Kingdom.

I'm already high on Baidu, Sina and Focus Media. CNOOC is possibly overbought, but has doubled since appearing on my radar months ago. China needs oil, pollution levels are out of hand. Makes me wonder what the pollution play will be in a year or two.

Jumping into China for the sake of jumping isn't wise, of course. But growth is growth is growth. And I feel equally bullish about Nintendo, which is one of only two Japanese stocks I like at all. If there are any others, I'd love to find out.

But back to China. Alibaba, 40% owned by Yahoo, goes public later this year. Already a sector leader. And what about Tencent, the dominant player in instant messaging? I'll have to do some digging, but a Tencent IPO might be, as the kiddies say, off the hook.

Disclaimer: Pupule Paul is long, just a teeny bit, in BIDU, FMCN and BIDU.