Crude Oil is Priced by Floor Traders

Subscriber quote detail in the commentary has become quite interactive over this past 7 market days, and feedback has helped a number of traders.

From an Advanced Mentoring and Level 3 subscriber in California, MF:

"Hi Floyd,

For the record, I never doubted you. You're a great man, not because signal 28(or whatever) in row made money, but because you're a great teacher which teaches how to trade not buy an option.

Like life, successful trading is a journey. I hope most of your scared subscribers learned that, and now make the changes to thrive during the journey.

Thanks,
Mike "

From AWE/Chicago:

"14.50 to 15.70 in 75 minutes. Scalped it again for 1.00 later. Right to 12,760 again, Floyd, and up 8k for the day. No emotions. Knew the risk to the trade"


Yesterday's moves helped us see the strength of uptrend, and longer term bias. Midday we issued an alert for May655P at 12.70 or less, promptly available to buy, and sold for up to 15.70, right near our 15.90 top, within two hours, and available for day trading scalping several times after that, all around the struggle at 645 and 647.

Today is historically stronger, the Dow up 8 of the last 12 years. Floyd sees a 52% chance of more downside, however, and today could show whipsaw, and a plunge. Who knows?

It's now a struggle beginning at a trading range, and oil will lead the "event" that will be construed to trigger movement...read that carefully, because the cause and effect are already in place around supply and demand; it will be an "event" (earnings, oil, fraud probe that will provide the trigger to what is already going to happen.

We'll hold and recommend the same put today, a high risk trade, focusing on one more downward plunge, before a renewed 350 point potential upside. Bias is being established.

OPEC tells us that $200.00 oil could truly be on the horizon, and we hear from economists we'll soon hit 4.00 to 5.00 gallon, to other economists telling us that oil has peaked, and gas prices could tumble.

We believe oil is priced entirely by commodity traders entirely at this time, and the value of supply/demand, or what can be refined (all the gobblygook we read each day) has little to do with the price of crude. We believe crude oil is priced by floor traders, leading the market with their manipulation.

In actuality the European Central bank may actually become our American ally, and our undoing. What's happening is that the Euro is becoming hugely expensive compared to our USD.

Europe is having trouble exporting because of the value of their own "dollar". We could soon see, thusly, the Euro devalue,and conversely the USD rally. What will happen is not so obvious to the American public, but oil is priced worldwide in U.S. Dollars. If there were a 10% rise in the dollar, for example, oil could fall by $1.00 a gallon.

This will, of course, move our silly little minds right back to the SUVS, and to massive consumption, as "all is better", and "it is easy again", and we will lose sight of the real picture, yet again letting the horse out of the barn and locking the door. The USD is at a 12 year low against the Japanese yen and the Euro has almost doubled against the USD since 2002.

We are now creating a foreign currency bubble, and all bubbles burst.

Remember that what the majority expect is seldom right. Recession could actually begin to slow (Floyd predicts the end by October 2008, while the economists still debate whether we are in one) because the USD strengthens, NOT from our wise movements or $160 billion stimulus package (yet most will think this is why we improve, again falsely). If recession slows it will do so because the USD gains false value BECAUSE the foreign currency bubble bursts.

We're watching. It may soon be time to short oil, and to move out of some commodities, as the USD may gain because of others stupidity, and nothing that we do to truly improve the value of our paper currency.

DJX or SPX Option traders: Puts profitable again yesterday. New Trade: DJX May ATM Put for 20% profits. Sell by day end. High risk trade.


"The federal government is sending each and everyone of us at least a $600 rebate. If we spend that money at Wal-Mart, the money will go to China. If we spend it on gasoline it will go to the Arabs. If we purchase a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala. If we purchase a good car it will go to Japan. If we purchase useless crap it will go to Taiwan ... and none of it will help the American economy. The only way to keep that money here at home is to buy prostitutes, weed, beer, cigarettes, whiskey, and tattoos, since these are the only products still produced in the USA. Thank you for your help & please support the U.S."