I think bear market rules still apply, but the decreased consumption of gasoline in the U S may have changed the fundamentals a little bit.  The decreased consumption seems to be enough to bring the price of oil down a little and should make our trade deficit less of a problem.  If that proves to be correct, the USD should not lose any more value for a while and precious metals will become a poor choice for the next few months.   Consequently I have sold my precious metals positions.  I still have a healthy position in GRZZX and some cash.  My purchase of GE might be premature, but God hates a coward.

This morning looks bright and sunshiney with European markey busting up and stock market futures signalling a higher market open in the U S.  TNX opened with a surge, but has backed off again from the 4% level.  However it is still high enough to give some support to the USD. 

uh

Yesterday was Tuesday, which means it was time for T/A with Nicole Elliott.  HERE.

Her call?  Interest rates are topping.  She analyzes the 30-year T-bill rate chart and says it's going down. So, if we believe her (which I do), we can open new positions (or trades) in bonds or similar.

Look at TLT in the chart HERE.  It's come down very close to major support. 

The Banking Sector is off about 2% this morning.  I said before that it's trouble and I'll say it again.  It's trouble.

Uh writes:

My purchase of GE might be premature, but God hates a coward.

As Euripides put it,

A coward turns away, but a brave man's choice is danger.

DeerIslander:

 
As for the political assessment of whether such legislation could pass, I am somewhat dubious but then again it is an election year and if corn-based ethanol makes sense .... To do so would have profound implications for our open market based system of property rights and seems to me would merely drive the trading off-shore..

Looks like Congress is onto the offshore loophole.  They have a bill pending that will prevent US-based oil traders from routing transactions through offshore markets to evade position limits.  It would also require the CFTC to substantially raise margins for oil trading.

http://www.pionline.com/apps/pbcs.dll/article?AID=/20080528/REG/62860923/1008

I personally like what I am hearing, but will not hold my breath on anything.

Edit:  Granted, the rules don't affect the Sovereign Funds, which can trade on the offshore exchanges. 

Edit 2:  I re-read that article and am unclear whether a US trader routing through offshore markets is different than a US trader trading on a foreign exchange.  Maybe there's a difference there, though I'm not sure.  DI, can you help me out? 

NYMEX is raising margin requirements starting tomorrow!

http://uk.reuters.com/article/oilRpt/idUKN2831412820080528

Edit.  False alarm (I think).  This appears to be part of NYMEX's routine margin changes.  I had wondered why the numbers didn't look that dramatic, and so went to the NYMEX site and found they change the margins on a regular basis.

So NOT the substantial changes that Congress has in mind. 

Well, it's official now.  Sell bonds.  Here's a Reuters article titled,

U.S. Data, Price Worry Trigger Global Bond Rout

Snippets:

Investors dumped safe-haven bonds in major economies on Thursday, pushing euro zone government borrowing costs to a nine-month high following upbeat U.S. economic data and inflation concerns from costly oil.

World stocks hit this week's high and the dollar rose broadly after Wednesday's data showed a jump in new orders for long-lasting U.S manufacturing goods outside of transportation, suggesting surprising strength in the factory sector. A gauge of business investment also posted a surprise rise.

Nicole Elliott is really going out on a limb this time.

EURUSD is backing away from $1.60, which I think is great. 

The Bovespa continues to amaze and the RTS is on the move this morning.
 

used for oil trading are not a big part. Only bad apples like Enron had a drive to use them. Sometimes foreign exchanges are used to offset (hedge) european grade against a US grade of oil, but it is mostly NYMEX in NY that is used. I had also read Michael Masters senate testimony before it was posted here by MP (MasterPlan). It drew a yawn from me. It was very lopsided, and it felt like sour grapes. The other thread titled "Taxing Energy" has much of the discussion on why some of the points don't make much sense to an oil person like me, so I will not repeat here.

It is noteworthy that pretty much right after that testimony, NYMEX long dated (Dec 2015) contract went up by $17/B in one week to close at ~$140/B. The key to all this is that fundamentals are getting tighter as we forward into the future (i.e. demand growing reasonably in a straight line and supply disapppointingly behind year after year). Part of the reason is OPEC, which is not reinvesting enough to add to production capacity. Just my take ..... Anil

Yes, depending on what the GDP figures are, we could have a dandy day today.  Precious metals and oil are backing down a little as the USD remains stable.  The Nikkei was on fire last night apparently for the same reason.  Stock futures are signalling a flat open, but that can change quickly.   My earlier port changes are beginning to look good.

uh

Anil, I wonder about Master's motives too. Elsewhere I read that he has some airline stocks, so he has an interest in having oil prices low.

Nonetheless, I think speculation plays a large part in energy prices, not for one because NYMEX market makers say so!  And I look forward to seeing the concept of excess spec either proved or disproved when the trading police get tough.  When they close the main loopholes and raise margins significantly, if energy and commodity prices come down, all things being equal, that will tell us something.  If they don't come down, then at least we've still closed some loopholes that favor the big boyz instead of the retail investors.  I'm never against that!

The CFTC has announced their first changes:

The U.S. Commodity Futures Trading Commission (CFTC or Commission) today announced a number of initiatives to increase transparency of the energy futures markets. The measures will expand the amount and quality of information received from energy traders to further the integrity and oversight of our nation’s futures markets. The recent dramatic increases in the price of crude oil traded on futures exchanges make these efforts paramount. The implementation of today’s measures will improve oversight of the energy futures markets to ensure they reflect fundamental economic forces of supply and demand, free of manipulation and fraud.

Read here for the details: 

http://cftc.gov/newsroom/generalpressreleases/2008/pr5503-08.html

This is great.  Now all they have to do is follow through.