Is Alan Greenspan Shorting The Stock Market?

Wednesday, October 14, 2009

Former Federal Reserve Chairman Alan Greenspan said he sees the U.S. economy slowing next year as the surge in stocks comes to an end. “The odds are that we flatten out, even though earnings are doing very well,” Greenspan said in an interview with Bloomberg Television, referring to the equity market. That flattening out will probably “put some sort of dull face” on the economy in 2010, he added.

The former Fed chief said he sees little threat of higher inflation now, even as the economy recovers. In the longer run, inflation will pick up unless the Fed withdraws the stimulus it has pumped into the economy, he said, voicing concern it may come under political pressure to refrain from doing so.

“We are still by any measure in a disinflationary environment,” said Greenspan, 83. “Unless we sterilize or unwind the big monetary base we’ve built up, two, three years out inflation really begins to take hold.”

Petroleum Oil Gas info Blog is a website for active online futures and stock traders. I will provide my real time trading decisions and my market thoughts on this webpage.

What Are The Best Stocks To Short Now?

As the market rallied to such an extreme level there are probably lots of good shoting candidates on the US markets. I think it would be interesting to open a debate here on the best stocks to short right now.

Is the dollar going to recover somewhat and are the mining and basic resources stocks that will give us the best bang for the buck? If this is the case, maybe United States Steel Corporation (X), Freeport-McMoRan Copper & Gold Inc. (FCX), Hecla Mining (HL) and Goldcorp Inc. (GG) are good candidates or even Market Vectors Gold Miners (ETF). Oil stocks could also be an interesting shorting pick, especially the smaller names that have run too far, too fast.

But the market correction can be focused in the financials and in that case I think the best play will be on the ETF, Financial Select Sector SPDR (ETF) or in some selected names like American Express Company (AXP), Bank OF America (BAC) or some smaller regional banks. Many market analysts have been expressing concerns about the commercial real estate and there are plenty of names to sell short on that space, Boston Properties, Inc. (NYSE:BXP), Simon Property Group, Inc (NYSE:SPG) or the sector ETF, iShares Dow Jones US Real Estate (ETF).

For instance, the short seller specialist, Jim Chanos is focusing on shorting healthcare stocks. I don`t think its the most interestign sector to short at the present time.

But the idea of this post is to open the debate on shorting opportunities on the US stock market with the members of this big trading community sharing their shorting picks and the reasons for the their selections. This way we can take advantage of the intellectual capital that we built on this webpage.

Will The US - China Trade War Send The Markets Tumbling?

"China said Sunday it would review complaints about U.S. exporters' pricing of chicken and auto products after Washington's move to slap punitive sanctions on Chinese tire imports, raising tensions in a trade dispute ahead of two planned meetings between the countries' leaders." in the Wall Street Journal

Is this the match that will ignite a market correction? I think it is. I am watching the early price action in Asia and markets are looking soft. I am already short Dax Futures and I am considering doubling my position when the market opens later today. Globex S&P Futures are already down 10 points, which is a major move for a Sunday night Globex session.

I think people will be running for cover on Wall Street tomorrow and for the next few trading sessions. The party may very well be over. And those who came late to the party will get a decent hangover.

Art Cashin Says That The Market Resembles The Summer Of 1987

“There’s just some eerie things about this—it’s reminiscent of spring and summer of ‘87 when nobody believed the rally and it kept going up despite skepticism, people shorting into it. It ate them alive until it suddenly turned.” says Art Cashin.

Is this a reminiscences of the 1987 stock market crash? Very interesting words from the veteran trader Art Cashin. He has been wrong all along, being bearish since late March or May but is he regaining his form?

Time To Short Oil?

Crude oil futures prices ended the session lower on Friday, posting the biggest single-day loss in 2 weeks.

NYMEX October Oil Futures dropped 3.7%, or 2.65 dollars a barrel, to 69.29 a barrel. That was the biggest decline since Aug. 31 and followed four days of gains that pushed prices up by nearly 4 a barrel on the "dollar weakness trade".

"It's the continuing battle between (weak oil supply/demand) fundamentals and economic optimism and there's a lot of uncertainty over which is going to be the strongest performer" in the conflict, said Gene McGillian, an analyst at Tradition Energy in Stamford, Conn.

Officials of the Organization of Petroleum Exporting Countries this week kept oil output restraints in place and said prices around current levels were fair for both producers and consumers. While OPEC leader Saudi Arabia expressed confidence over the coming economic recovery that will lift demand for oil, some analysts voiced concern about oversupply weighing on the market. I think there is an increasing possibilities that the OPEC members will cheat on their quotas oversupplying the market. But the major risk shorting oil is still the "dollar weakness trade" that has been going on.

US Markets Have Done Nothing In 8 Years

"Eight years have now passed since 9/11, and the Dow is essentially unchanged since that horrible, sad day. On 9/11/01, the Dow was at 9,605. The index is currently trading just 15 points below that level at 9,590." in Bespoke Investment Group Website

After all the bull and bear markets of all these years the Dow Jones moved less in 8 years then it normally moves in a hour. Remarkable, not?

Longest Streak Since November. Can It Continue?

U.S. stocks gained for a fifth day, the longest streak for the Standard & Poor’s 500 Index since November. The S&P made a fresh 11 month high and keeps defying gravity. I do not have any trading position on the S&P Futures but I am short Dax Futures and feeling the pain. I am off over 130 points in just 2 trading sessions.

But even more frustrating then that is the behaviour in the Euribor Futures complex. I am losing in that position every single day. Quite amazing. Even though, I have the December and March futures so time is on my side on that trade.

But not everything is going against me, my stock picks are doing very well. Dynegy and Hecla Mining are going through the roof.

After losing a few thousand euros shorting Dax Futures I think its time for the bears to charge the market lower. I am as bearish as I can be and I expect a major correction in the global stock markets in the next few weeks.

I will regroup watching Rafael Nadal at the US Open. He will play against the talented Fernando Gonzalez. It will be a close call.

Natural Gas Futures Seasonality. Time To Buy.

This is the Natural Gas Futures seasonal graph that was sent by one the members of this trading community. As you can see this is the best time of the year to be long Natural Gas Futures. The seasonal graph shows us that September and October are the best months for Natural Gas prices increases.


As you know I bought October Natural Gas Futures last week at 2.500, very near the bottom. On friday the natural gas futures spiked higher more then 8% and I had no trouble at all in riding it higher. I am still holding it for higher prices with a stop a little above my entry price to secure a part of my profits no matter what. Anyway I think a major long term bottom in gas prices is already in.

Today I will take the day to watch the US Open. Nadal, Tsonga will be in action today and I am looking forward for the night session where the ressurgent and always spectacular Taylor Dent will meet forces with the brit Andy Murray. I love comebacks and I still remember when Jimmy Connors made a comeback at 42 years old and sent the US Open crowds wild with his fantastic play.

Shorting S&P Futures. Buying US Dollars.

On the reaction to the Employment Report I sold some more S&P Futures and I closed the Nikkei`s that I had paired with some S&P`s overnight. All this indecision makes me think that we are at an important crossroad in this market.

I will get back to the Nikkei Futures soon, hopefully after a meaningful correction.

I am turning dollar bullish again and I am testing the market with a small long US Dollar, short Euro currency position.

Natural gas futures are showing some signs of life but is this the real reaction rally?

Petroleum Oil Gas info Blog is a website for active online futures and stock traders. I will provide my real time trading decisions and my market thoughts on this webpage.

Waiting For The Employment Report. Consensus Is -200K On Non Farm Payrolls.

It will be important to read the market`s reaction to the data because I think we will have a major move one way or another. So I have my orders lined up on my trading platform so that i can hit them as soon as I need to.

My commitments are rather heavy so I have to read it right and act fast.

Risk Taking Appetite. Major Commitments In The Market.

My risk appetite is making multi months highs. I couldn`t stand aside the collapse in the Natural Gas Futures and I bought some futures at 2.500. I was looking at a price chart and I am pretty sure that a major rebound is imminent. I had no fear and I bought a few contracts that I plan to carry for a few trading sessions.

I was also looking into some beaten down stocks and I bought a few Hecla Mining (HL) shares. Silver and precious metals in general are trading up big time and I think Hecla Mining (HL) stocks can double in a few months. I also bought some out of fashion Dynegy Inc. (DYN) stocks which I am afraid that I will have to wait a few months to see some real price appreciation. But I read the Fitch downgrade report and I concluded that there is some upside potential to this stock. Besides Dynegy (DYN) was trading at a major support level so I gave it a shot. And while I was looking around the utilities sector I came across Duke Energy (DUK) with a 7% dividend yield so I bought it for income.

Jean Claude Trichet comments were pretty dovish and I suffered on my Euribor Futures. I expected an hawkish statement from the ECB and I got a confused and unclear statement. Anyway the pain will only be temporary as the Euribor rates are trading 20 basis points below the 1% ECB rates. So, I added a few contracts to my short trading positions and I probably got top prices for this move.

Finally the Employment Report will be released tomorrow before the trading bell. I closed my remaning short S&P Futures and I can play the market both sides tomorrow depending on the market reaction to the data.

Buying Natural Gas At 2.5000

I am buying Natural Gas Futures at 2.500. This is the most oversold market I have ever seen and I always get a big bang when I am able to buck such trend.

I am probably betting a bit more then I should but I am expecting a big rebound at any time now. I have to admit that my heart is racing but that is probably a sign that the market is about to reverse.

This futures expires in September 28th and between now and then I should be able to close it with a decent profit.

Correction Is Under Way. We Are On FED Alert.

I have seen this before. Markets are beginning to sell off worried that the easy monetary policy is coming to an end sooner then expected.

I am carrying a bigger short line having added some shorts at 1022 and 1019. I have a first target at 1000 but I think we are going a lot lower then that.

Financials like Citigroup Inc.(Public, NYSE:C) and Wells Fargo & Company (Public, NYSE:WFC) are leading on the way down today.

Very Active On The S&P Futures.

Very important economic data points are coming out later today:

- ISM Manufacturing, 50.5 is expected;
- Construction Spending, 0.0% is expected;
- Pending Home Sales, no estimate available

I am closing my short line at 1015 and waiting for the data to decide what to do next. Economic data has been stronger then consensus in general but the market reaction has been rather soft. I am leaning to the short side but I will watch these data points from the balcony.

I was awake all night watching the Nikkei`s and trading forex. I am needing a rest. It already looks thursday or friday to me. This forex system is doing so well that I am trading it day and night. I am going to pay for this sooner or later...

You can check all economic data at econoday.com. This is the site is normally use. Have a nice trading day.

Petroleum Oil Gas info Blog is a website for active online futures and stock traders. I will provide my real time trading decisions and my market thoughts on this webpage.

Over a Barrel - The Truth About Oil

Last night, ABC's Charlie Gibson presented "Over the Barrel - The Truth About Oil." The program was a well-crafted presentation about the supply side issues of oil. However, there were some notable problems.

First, the program began with news clips about America's addiction to oil but provided minimal demand-side analysis of our appetite/need for oil. If we are truly addicted to oil, we need to address ways to use oil and energy more efficiently. With nearly two-thirds of oil used in transportation our emphasis should be in improving utilization. Petroleum is a depletable resource and we need to use it sensibly.

Second, the program didn't spend enough time on using other energy forms to displace oil. We should have initiatives that reduce and eliminate oil use in heating and power generation applications. Increased use of electric power generated from "clean" coal technology and renewables should play an increased role.

Third, in examining the cost components of gasoline, the ABC report failed to include the contribution of gasoline taxes. Taxes account for around 25% of pump prices compared to 10% added by private company margins. So State and Federal governments are making 2 1/2 times more net revenue than oil companies and gasoline stations.

Fourth, where would a news story on oil be without a conspiracy theory about the big bad oil companies. Gibson's interview with a consumer advocate did little to address the issue and only perpetuated the myth that "big oil" controls oil markets.

On the plus side, Gibson did a good job in covering the hidden costs in guaranteeing oil supply from the Middle East. We should increase Federal gasoline taxes to cover the expenses associated with "securing" this supply. This would reduce gasoline demand and help balance the budget.

It was good to see that sense of reason Boone Pickens on the program. Mr. Pickens emphasized that we are not going to drill our way out of this problem. This is a position that we have long supported. In a analogy to the illegal drug trade, the solution to addiction is not to produce more drugs. While we may produce more than the two million barrels a day from new finds that Pickens suggests, this problem is not going to be solved by supplying more oil.

The analysis of the role of speculators on oil prices was good except that Gibson gave the idea that millions of barrels of oil are being bought, sold and moved around the country. Most of the speculation is in paper barrels (options) rather than physical barrels.

The program had some good points, but fell far short of delivering on "The Truth About Oil."

Obama's Tax on Oil and Gas

I recently received a letter from Jim Hackett, Chairman, President and Chief Executive Officer of Anadarko Petroleum Corporation, asking for my help in a grassroots campaign to inform elected officials about the the $400 billion in new taxes that the Obama Administration proposes on the American oil and gas industry.

Now I found this kind of surp[rising because Mr. Hackett has never contacted me before. No cards on my birthday, no fruit cake at Christmas, and no offers to increase my retirement benefits. Not that I am really complaing. After all Mr. Hackett does have a lot on his plate. I am pleased that he contacted me on this issue and hope that other oil and gas CEOs are taking similar measures.

He suggests the following measures:
- Join the API's Partnership for America's Energy Security
at http://www.partnershipforenergy.com/
- Send a message to your elected officials through social networking sites
- Sign the Louisiana Oil and Gas Association nationwide petition on President Obama's
at http://www.loga.la./esa/stop-obamas-tax-inrease.html
- Write or call your eleted officials

During the election, I tried to contact the candidates regarding energy security. I sent them an e-mail from their web sites. The Obama Campaign asked for money, Clinton sent a automated response and I'm still waiting to hear from McCain. I was never able to present my ideas to them.

I hope that this campaign will work because even in those darkest dumb moments that we all have, I cannot see how taxing the oil and gas industry is going to help the economy or lessen US dependency on foreign oil.

Tell your legislators "Don't Bite the Hand that Fuels Them!"