EWJ WEEKLYThe Nikkei is up 1.85% this morning!

Do I really have to say anything else to point out how stupid the markets are getting?  Japan imports over 5M barrels of oil per day – they produce 6,000 barrels a day so let’s say they are VERY dependent on imported oil.  They consume 3.6Bcf of Natural Gas per day and produce 168M, they import 200M tons of coal per day and produce none.  Now THAT, my friends, is an energy importer!  Japan is the World’s 3rd largest producer of nuclear power but we’ve seen how that’s going and yesterday’s 7.1 earthquake shut down yet another reactor (but no danger, according to the always-reliable TEPCO).  

Not only does Japan not seem to care about the 30% increase in the price of energy since mid February (or the earthquakes or the radioactive wasteland that 10% of their country is becoming) but the Dow Transports are flying high as well.  I guess they must be transporting oil instead of burning it!  Why not, they have a movie now about a rabbit that poops candy so I guess we can all believe that airplanes poop oil when they take off…

Yesterday afternoon, Dave Fry asked “Where are the dip buyers” for the EWJ but they came in droves last night, despite the oil, most likely encouraged by the weaker Yen (good for exporters) even though that makes the oil relatively even MORE expensive.  Even worse, Japan buys Brent Crude, note West Texas, so they are paying $10 more than we are per barrel already.  Priced in Yen, Brent Crude is up 24% since March 15th.    

SPY 5 MINUTEHey, what inflation, right?  We knew the fix was in yesterday when the S&P was slammed up to close at 1,333.50 after failing that line earlier in the day.  As you can see from the chart – it’s the same old pattern, jack up the indexes in low-volume (especially in very low-volume pre-market trading), reel in the suckers and then the big boys dump into the retailers all day long.  Once the retail bag-holders replace enough of the Banksters in equity holdings, it will be time once again to pull the plug and remove another 1/3 of the wealth of the Middle Class – or whatever is left of them after the last round of asset theft.  

Despite the fact that the indexes moved up and down 1% a day, the VIX remains at a ridiculously complacent 17 (we are long the VIX at 16.50) which is perfect for a fund that is dumping because if I have 1,000 shares of IBM at $165 and I have a $20 profit from $145, I can buy 10,000 April $170 puts for $5.80 and dump all my shares at market price and even if IBM tumbles all the way to $150, I still get to collect $170 from the sucker who sold me the puts so I lock in $19.20 of my $20 gains prior to selling.  That’s the beauty of a low Vix in a sky-high market for the people who got in ahead of you – they really can’t lose…

In fact, if I want to be really evil, I can sell some other sucker 10,000 May $165 calls for $3.60 along with the puts I buy and then when I crash IBM, I make money on both ends at once.  If you want to see what that looks like, check out the synchronized sell-off of our MoMo stocks (as noted yesterday) and compare that to the options action of the last few days.  Somebody made a boat-load of money yanking the markets around! 

 

 

IN PROGRESS