OPEC- USO=Front running

You may have just noticed a spike in oil, a definite spike in the NYSE TICK and to some degree in the averages, but not as much.

When I taught technical analysis for our county school system's adult education program, the first class, the first lesson was playing Cramer's "Street.com manipulation" video, after watching that video, everyone in the class looked completely dejected and hopeless, they grew up on the notion that value and earnings create price movement, when they found out how much the market was manipulated, they just looked like they lost their best friend and all hope.

That wasn't my intention, but to beat the market, you have to know what you're up against and I think the best way to beat it is to follow those who move it.

That brings us to oil just a few minutes ago as it spiked on news from the Financial Times that the Nigerian oil minister said OPEC may have an emergency meeting to deal with the slide in oil prices, whether true or not, it's too early to tell from the 3C charts, we know oil is likely in a consolidation and it does have the gas in the tank to move higher, but I would wait for the set-up and if it doesn't come, I wouldn't kick myself for missing the trade. You have to be willing to let a few slide past if you're going to go after the highest probability/lowest risk trades.

In any case, that wasn't what I was interested in, it was this...dirty, rotten front-running the Press statement...

 Just to visually prove today has been a dull day, the NYSE TICK has been ranging between about +/- 600 which is a ver flat range for internals. There were only two spikes, one down to about -1100 and then the oil spike to +1200.

Just the way USO's price was trading (flat lower range) would suggest to me that there was some underlying activity going on and you can see it intraday, someone was accumulating before the press announcement or what is otherwise known as "Front-running" on inside information.

You can see the same thing in Crude (Brent) futures.

This isn't a big enough divergence to suggest we are at our anticipated trade set up which is actually below USO's range...

 This is USO's daily chart, the move we are looking for is a head fake below the range (stop run), which "may" start today as volume is rising and the spike in oil was a classic pump and dump...

Here's the spike/pump and then the dump, but someone was front-running that press announcement and probably made a decent little bundle.


We'll see if price sets up a head fake, if it does with accumulation, a real OPEC announcement would have oil accumulated by the pros and on the cheap which would likely mean they knew about a real OPEC emergency meeting in advance, which would also be VERY interesting for our trade set-up.

There are a lot of "if's" and conjecture in all of the above, but it is a possibility that makes sense and would be a fantastic lesson in why we watch and follow what smart money is doing rather than just change our opinion with whichever way the wind is blowing.

Why again are the bulls so incredibly bullish? Is it the worst start with the worst negative surprises to macro data for the new year since Lehman or the ridiculous forward P/E's? Maybe a F_E_D rate hike or neutered F_E_D? The expanding war in Ukraine that involves the US and Russia on ground that Europeans are scared of enough that the US just sent A-10 tank busters over to Europe to calm nerves; planes designed to kill Soviet tanks during the height of the cold war on European battelefields? Or just because price jumped in a very silly way on Friday on an event that is almost pure downside risk?