Trilling Thursday – Moving Back to the High End of the Range?

Eventually you either run out of booze or money and then it's time to clean up and head back to reality.

I don't want to get to excited but:

As we did on April 10th, we're poking back over the weak bounce line on the S&P after a huge and silly rally that completely ignored what was actually going on both globally and locally. That spike lasted 3 days, less than March's 5-day spike over the strong bounce line but tied with February's spike over the strong line while January spent almost the whole month over the strong line before setting the year's lows (and the strong retrace) within 10 days.

As we expected, yesterday was a fantastic day to cash out as there were buyers for our overpriced stocks all day long. Have a good vacation smart people who took my advice! We're expecting to top out at 2,720 (April's high) on /ES and then we'll try a short again but, as we did in yesterday's Live Trading Webinar (replay available here), we're still shorting the Russell (/RTY) below the 1,600 line (tight stops above) and /ES if they fail 2,700 – because we'd hate to miss that fun. Dow (/YM) below 24,500 and Nasdaq (/NQ) below 6,900 would confirm weakness.

For the rest of you, let's smash our heads in with those copper cups they serve Moscow Mules in (after drinking it, of course!) so we can get in the right frame of mind to pretend this BS market is worth talking about. Ah, I remember Club Maximus in New City, NY when Monday's were Kamikaze Night and they played New Wave Music and served 3 shots for $1. A Moscow Mule is really a Kamikaze but somehow they decided Kamikaze was insensitive or something. Anyway, back then you could get in if you LOOKED 18 so I was drinking there since I was 15, in 1978 and we'd drop $5 on the bar and the bartender would line up 15 shot glass and fill them all up, spilling plenty on the bar as well – ah, good times! Then we'd dance to these songs:

Having 15 drinks in front of you makes you generous as well as drunk (and I had a good job so I'd end up buying about 60 on a typical night), so we met lots of girls and had a great time and that's pretty much how the markets are going with low taxes and cheap interest so there's plenty of drinks for everybody and no one thinks the party is ever going to stop. Unfortunately, eventually you either run out of booze or money and then it's time to clean up and head back to reality. We're not there yet – but the booze is running low and so is the cash!

You can see the party is winding down as there are fewer and fewer bargains out there and the interest rates are climbing. As we expected, yesterday's 10-Year Note Auction went off at 2.995%, the highest level since 2014 but the curve is inverting as the 2-year hit 2.526 this week – the highest level since 2008. So the 2-year is rising faster than the 10-year – not good! Today we peddle $17Bn of 30-year notes at about 3.15% – also a multi-year high. This morning we're getting the CPI Report and that looks like it's still 0.2% so nothing alarming on the infation front – yet…

All I know is that, even on special, it's $3 a shot in NYC now and that's up 800% in 40 years so that's a lot of inflation!

Speaking of inflation, oil has been on a tear flying from $68 to $71.50 (5%) since last Wednesday and that means we're looking for a $1 (weak) retrace back to $70.50 and we're shorting Oil Futures (/CL) below that $71.50 line with tight stops above. We looked at the EIA report in yesterday's Live Trading Webinar (where we also made over $500 for the 2-hour session with our Futures trades) and we realized the headline numbers, which showed a draw in Crude of 2.2Mb and a draw in Gasoline of 2.2Mb and a draw in Distillates of 3.8Mb (8.2Mb!) was very misleading because the unreported "All other Oils" had a BUILD of 6.6Mb and, overall the net draw in commercial inventories was just 2.7Mb.

Not only that but we imported 500,000 barrels a day LESS than we did last week (3.5Mb) and we exported 21 MILLION barrels of refined products out of the country. So there is NO actual demand story in the US – just a lot of market manipulation by OPEC as well as the US Energy Cartel, who are making a fortune while you are paying 30% more at the pump than you paid last year. Keep that in mind when you fill up for gas – not writing to your Congressman and not voting for change is costing you about $15 a tank!

Keep in mind that, when the GOP forced the US to abandon the 40-year ban on petroleum exports in Dec of 2015, a barrel of oil was $37 and a gallon of gas was $1.75 – in just two years, they've already doubled the price of both! What kind of idiots would expect anything less when you change the rules so that a country that IMPORTS 7Mb a day of oil can start shipping oil and refined products OUT of the country? Who could possibly benefit other than energy traders seeking to maximize their profits?

*You can save yourself $15 x 52 weeks = $780 per car by writing your Congressman here and telling them how sick you are of them doing things for the oil companies that hurt you: