who got a match?

Mr Market has been holding it for oh so long but looks just about ready to take a piss worthy of the history books. huge deterioration in breadth today, particularly considering the relatively mild percentage declines on the major indicies. one prerequisite I've had for a real bear market has always been a sustained underperformance of gold, and we've finally seen that. this isn't a call on gold, merely an observation. but an observation with great implication.

my bearishness grows for a whole host of reasons, which I may end up cataloging here, but aside from my puts on oil, I'm still on the sidelines. just listening to some good music for now.



no visible means of support and you have not seen nothin' yet
...everything's stuck together

$OSX:$OIX again

it is always dangerous to place too much emphasis on a single indicator, but the persistent deterioration of the $OSX:$OIX ratio cannot be ignored. plus, oil (along with all else) has been rebounding on paltry volume.

I bought deep-out-of-the-money puts on December 2012 WTI late last week. pretty speculative as a trade, but I prefer to view it as a hedge to our future income (my employment and Lisa's mineral rights).

VT - world stock ETF

pretty awesome triangle here. great trading setup, if you are clairvoyant. me, I like being all in cash, minus the Christmas gifts.

USO

so I got out of the USO short prematurely today. but I have been making solid gains by closing positions well before targets are reached.

right now the account sits completely in cash, waiting for the next 'reactionary' opportunity.

and by the way, I'd like to thank Gary at biiwii for establishing the initial crude oil upside target a while back.

Sony

you know, I had written a whole piece on why I bought Sony (SNE) but then never posted it. thought I would refine it more or whatever. then this morning I notice the stock up 4 or 5% and I'm like, "shit, I'll take that money!" and closed the trade. so now y'all will never know all the reasons that SNE is (was?) a great buy for the holidays.

the drawback in closing out the position is that I no longer have any long positions to balance my short of USO, the crude oil ETF. but at least I have more cash available to take advantage of the next opportunity.

The Transactional Value of Cash

Mark Cuban explains:



that is the best three minutes of investing advice I've ever heard.

GDX:GLD

another triangle. I love wasting time by optimizing point and figure charts to portray triangle patterns in the most visually appealing manner.

this latest one is kinda funny looking though. but it's the best I could do.

Crude oil futures price curve

WTI in blue, Brent in red.

not sure that the market structure is telling us anything significant here, except maybe producers are competing to lock in prices on the distant contracts.

$OSX:$OIX

while WTI crude has rallied the past couple months (USO in light red on chart), the ratio of oil service stocks to oil producers ($OSX:$OIX) hasn't done much. I've found the ratio to correlate nicely to crude prices over the years, and so view the ratio's lack of strength as a bearish tell for the oil market moving forward.

I don't feel any obligation to make disclosures on this half-conscious blog, but I will say that I shorted USO on Friday. although I think oil can move substantially lower over the longer term, I'll probably take profits on this particular trade if USO drops to around $35 (low $90s for WTI).

if I am wrong, then hopefully oil will advance in the context of a broader year-end liquidity rally and my long position in SNE will offset. if oil goes up and equities tank, then I'm pretty much fucked.