The Bond trade parameters are the same as in the last post.
I think it is time to go on the record here officially on the price of Gasoline.
This chart does get a bit messy but you should be able to click on it to enlarge it. The black line is the net position of the Large Speculators ( Funds Basically ). It is as clear as can be that they are the trend drivers both up and down. They typically are scale in on the way up, scale out on the way down or into short positions. This has been the nature of how they have traded for as long as I have been at this, and quite some time before that. This reality is what makes trading with the Commercials so challenging at times. They are constantly fading the market moves to hedge their bets. You have to keep in mind that the commodity markets were formed to allow producers to hedge their bets. As a result that is what they do now and always have done.
Along comes technology and large traders can trade somewhat mechanically and push trends up or down. There are multiple examples of both instances on this chart. In some respects it is true that the large specs are the trend drivers, so you can blame them on some level for prices being high. However, you also need to buy them a beer when prices are low. You cannot have it both ways. If they are to blame for rising prices then it is also appropriate to pat them on the back for low prices. Oops, I guess most folks do not have interest in the second part of that equation. The government just wants to control everything. I saw today now Barry wants to spend $52 Million to regulate Gas speculation more? When will this a.....ole ever save money on something. He just spends and spends and spends. The regulations are in place but there is one very big problem. There is one very dominant player in the middle of this mess, Goldman Sachs.
Allegedly they were involved the last go around when Oil prices flew higher housing a fund that had exemption from position limits even though it should not have. They also are rumored to be one of the proxies for the PPT. Net net they are very "inside" with the government. They also make quite a bit of money from their trading operations. As a result, I find it hard to believe that anything will really change here. They make their secret back room deals in exchange for agreeing to take the public spankings in the way of fines etc, while all along the insiders game gets more inside. Allegedly. Now even if we accept the opposite view that none of this is true, just the sheer size of the trades they make for others put them in a very strong position to be able to push prices here and there.
This is just the way the world works. Joe at the local bicycle shop probably has a favorable margin on a pump he resells making more profit than you would think. I don't really care about any of this and neither should you. If you just follow the price trends, this is just noise pure and simple. If it is pure folly it is irrelevant. As traders we can see the trend is still strongly up here on a weekly basis even if the daily chart has broken down a bit. We can see that the Small Specs have the largest net long position in history up here, and that is a looming problem for this trend. It is tough to step in front of, but if and when we get a trend break with that fundamental as a back drop, it will be time to aggressively get short here. Not yet.
I don't see much in the way of trades for tomorrow. I do have some weekly setups I like but drilling down to the daily is not giving much in the way of congruent entries. Just not much to do here other than watch the Bond trade. This is typical in that we cannot expect every trade to be great. I am glad the first one out of the gate is crappy like this one, so it does not give people false expectations. Trading is never easy and this will be no exception.