Saturday, July 17, 2010

Oil is well, pressure basics

So the pressure is not as high as expected on the BP cap. 

And the pressure is going up slowly, like 2 PSI per hour out of 6500 PSI total.
1) The reservoir pressure is depleted because of 3 month of oil spewing.   If this is the case i would expect that experience with 10's of thousands of wells ought to let them model this very carefully and knowingly.   Since this is being discussed ambigously, I therefore rule this out-- for the most part.   And if it was reservoir depletion, why would the pressure build up now.

2) The oil is flowing somewhere else, but it's rate of flow is being slightly slowed, as it fills up the interrock /sand spaces deep within the ocean bed, and somewhere near where the well piping is breached.   As it fills up the space, it has to push harder and thus the increase in pressure.

2a) A subset of 2) is that the oil is flowing from a  lower sand bed, to a higher sand bed, and this may not necessarily turn into a problem, as long as the upper sand bed is a "reservoir" and it wont let the oil to leak out to the sea floor.  

The other thing that is obvious is that BP realizes that if they blowout the seafloor and the 2.5Billion barrels of oil escapes, that they are toast....bankrupt.   By putting the cap on, they increase the risk of a catastrphic blowout occuring, with the oil flowing freely from the top....they won't immediately cause a well bore blowout.

That was, in my humble opinion, the big delay after the cap install....BP went to the Gov and said, look here --if you want us to try to stop this well with the cap, there are risks, and you cant force us to operate this cap at our risk of ruin, therefore you sign here saying you (the US taxpayer) will backstop us if this things blows out completely.   Otherwise we would be idiots for doing anything but leaving the oil leaking freely.

Lets hope for the best.

Fear Factor

Do you like this stuff, sign up as a follower, it is free, and it might even encourage me to keep posting and not just mothball this stuff that takes so much time.

I haven't done a Fear Factor post in a while, as Fear has been consolidating.

Search the blog for more interpretation on this favorite indicator. It combine index value, volatility, USD, and precious metals into one easy to understand chart.

And finally, what is becoming of our news services----hilarious!

Friday, July 16, 2010

Euro Triangle Trendline becomes important ARTIFACT

The second chart was created using TOS "On Demand Feature" which I knew about but just used today. You can go back to any point in time and trade it as if it was realtime, or 3X realtime, or you can jump to any time you wish.

Very cool.

F!!!!!!! Elliot Wave release a 40 page Elliot Wave theorist...

I haven't broken out my proprietary Elliot Wave Imternational RJI, Ramp Job Indicator.

I hate being short the market over the weekend and they EWI releases an EWT of EFF......but probably more bears willl jump into the fray Monday, and then they will be fried by a massive ramp job.   Damn I hate that.

I also don't want to "get cute" with this market and try to play every up and down, just stay down, however I will study over this weekend and see if justifiable to close shorts Mnoday AM, and then re-enter during an expected ramp.

Out for the weekend, may post on Sunday.

The Ellipse

Eur and ES technicals

The Euro bounced down off my unorthodox Fib 61, see chart.

My prediction of "Dine in Hell" from Wednesday night, came true.
ES appears to have mostly decoupled from the Euro, and the bond and US FX markets are just acting kind of weird.   Flight to safety or flight to inflationary monetary practices?

When the old school practices of safe haven are tried, and a Gila Monster is lurking therein --- perhaps then the real panic starts.

ES did a nice backtest on the 100% channel of the PRS 133.    Unfortunately unless you were trading late Thursday, uh, I was doing drywall....ouch.    But was 50% in on a short futures, so that was nice.

This is expiry, so Monday and Tuesday next week can definitely see some big moves.    I will remain 50% short.

Wednesday, July 14, 2010

Dine in Hell? Or get pounded by the declining wedge on the S&P (that means bullish)

Very odd happenings on the BP Oil Spill

None of this stuff makes sense given the information they are giving us.

The well is likely blown out, and there are also political and economic maneuverings going on.

Why in the world would they stop the relief wells that are 98% done.

Euro Nearing 61 Fib of the Drop

Note I say 61 Fib, but look where I start the top from. Seems like a good wave to start at.

Sector analysis and sample of daytrading futures in action (link keeper)

Before you get too bullish, look at the sector performance by 13 weeks.

Also look at consumer financial services.   They are especially weak.

Earnings and put/call

Some headlines are just too funny.

Some more put call charts, on the daily. Esp for company with earnings coming up.

I don't see compelling information in here in particular, just made these charts.   Feel free to comment.
Made these using my rarely used Etrade, but liking their trading platform upgrades.

Tuesday, July 13, 2010

2.5B Barrels of oil

They delayed the "testing" of the cap.

Huh?   the Cap is now on a solid bolted flange connection.  There is little need to test the cap.

The whole intent and delay behind putting this new setup in place is the worry behind whether the well shaft itself is damaged, and most likely it is.     All 2.5B barrels could flow out if it is.  

Or they are forced to try to shut it off via the bottom kill, which if the well structure is very damaged, might not work, or if it does, mean they do not get the oil.  These are oil men, they want the oil.   Let me repeat, they want the oil.

This delay, like all the other delays on reports of events, are when they are tyring to come up with the next step and spin the truth.    The bottom kill might work, in the 1979 gulf spill, it took 2 bottom kills to stop the well.

This delay is actually meaning bad news.

Greece, Huge Euro Rally, and put call charts

Greek banks bought 80% of the 1.25 B bond sales today, for under 5%.   I wonder if they did that willingly?

Monday, July 12, 2010

Pictures of the oil spill....not the oil, the effects.

I love SCUBA diving.   The underwater world is an incredible place, unless of course, you dump a couple hundred million barrels of oil on it. 

Comments please (and then back to the markets!)

It's still all about the Euro

Well, maybe not.  At some point they will decouple, maybe when people really realize this Ponzi is up.

Europe will be the first to crash.   

Seems like my call from Sunday is coming true, euro is notching lower.

I re-did the PRS 133, expanding it to catch all the action of the advance.   And the Euro plummetted (well .5 c ents) and so far has stopped and bounced on the line.

Below is original and revised

Sunday, July 11, 2010

400 points above the low, And Eur changing Quadrant

Big Bens Playbook

One would be remiss to not know the likely playbook of the Fed.

Here is a speech from Ben Bernanke in 2002.   He will fight deflation at any cost.

Below is a small excerpt
Beyond its adverse effects in financial markets and on borrowers, the zero bound on the nominal interest rate raises another concern--the limitation that it places on conventional monetary policy. Under normal conditions, the Fed and most other central banks implement policy by setting a target for a short-term interest rate--the overnight federal funds rate in the United States--and enforcing that target by buying and selling securities in open capital markets. When the short-term interest rate hits zero, the central bank can no longer ease policy by lowering its usual interest-rate target.5
Because central banks conventionally conduct monetary policy by manipulating the short-term nominal interest rate, some observers have concluded that when that key rate stands at or near zero, the central bank has "run out of ammunition"--that is, it no longer has the power to expand aggregate demand and hence economic activity. It is true that once the policy rate has been driven down to zero, a central bank can no longer use its traditional means of stimulating aggregate demand and thus will be operating in less familiar territory. The central bank's inability to use its traditional methods may complicate the policymaking process and introduce uncertainty in the size and timing of the economy's response to policy actions. Hence I agree that the situation is one to be avoided if possible.
However, a principal message of my talk today is that a central bank whose accustomed policy rate has been forced down to zero has most definitely not run out of ammunition. As I will discuss, a central bank, either alone or in cooperation with other parts of the government, retains considerable power to expand aggregate demand and economic activity even when its accustomed policy rate is at zero. In the remainder of my talk, I will first discuss measures for preventing deflation--the preferable option if feasible. I will then turn to policy measures that the Fed and other government authorities can take if prevention efforts fail and deflation appears to be gaining a foothold in the economy.
Preventing Deflation.....

Greece to try and sell bonds on Tuesday

Euro tanking pretty good on Sunday.  It is playing out the PRS 133 Channels pretty well.   And I am toying with the PRS 177 channel = 133*133.

ES not really responding directly to Euro moves, I think that fundamentally it will follow. 

QE2 or austerity? And a link to Earnings

This link is important.   An official US commission gave a stunning report that our "debt is killing us".    Obviously, this goes completely against more stimulus.

In theory, buying a stock is like buying the Net Present Value of Future Earnings.   We know it doesn't work like that though.

Well earnings season is upon us, and this link is one of the best ways to get quick info on upcoming earnings.
And finally, this interesting look at Sovereign Debt Defaults.