There was a news blurb a couple of weeks or so about a whistle blower stating the troubles here. I remember thinking that I'm glad that I didn't own any BPT anymore. Another reminder of the fragility of the oil complex and the real dangers of betting against higher oil (or NG prices as MotherRock can attest).

the tape so far is a great example of an opening range which some participants here have discussed recently. i would expect volatility in general to contract until tomorrow at about 2:15.

however, transports have broken down out their morning range. i am not sure what to make of friday's chart formation for the $DJTR except to say that it looks like one of the more bearish one day reversals i have ever seen in an index. that said, one day chart formations can be deceiving.

i am trying to remain wary of a rally but still think we get at least a hard shake-out, if not worse, before we take out resistance (s&p 1280 area).

So far this morning, it appears that the U.S. markets are shrugging off the temporary bump in oil prices. Interesting that the OIH is only up 1%, after being in the red for a good chunk of the morning. The day is still young.

Sentimentrader-

"Regarding the Commitments of Traders report, I wrote that commercial hedgers (aka the "smart money") in the index futures had reduced their net short position by over $10 billion, the largest one-week positive swing in history. The Commodity Futures Trading Commission later posted a notice on their web site that part of the reason for the substantial changes in positions was due to their re-classification of several large traders - in effect, changing our sample.

Using their updated classification, it looked like commercials reduced their net short position from $19.5 billion to $8.7 billion. However, if they had not re-classified the traders, then the net short position would have only been reduced to $17.4 billion - not a $10.8 billion positive swing, but rather only a $2.1 billion positive swing.

Not only is the end result that commercials apparently weren't nearly as bullish as first appeared, but now we're dealing with a possibly drastic change in who's positions we're monitoring, which will throw off historical comparisons. The re-classification was especially pronounced in the Dow, Nasdaq e-mini and Russell 2000 e-mini futures contracts."

stockman-

Was the reclassification done to several "Cayman Island Hedge Funds" I wonder? ;)

Here's what I'm watching (I am a big picture kind of guy):

Consumer Credit (3pm today)
Does it continue retrenching? I think it does.

Producer Prices and Costs (TU)
More upside surprises in store?

MBA Purchase Applications (WED)
These have not been "evidence of an orderly decline" at all!

Jobless Claims (TH)
Continue their unexpected rise?

Import/Export Prices
Is there evidence here of inflationary pressures abating like the Fed wants (hopes)?

More reports are due out this week but these are a few I am focusing on to see if the Fed gets its wish. I am betting that in the aggregate it doesn't.

stockman,

thank you for the heads up on the c.o.t. data. when i heard the report initially, i was mystified. the biggest reversal from short to long in the history of the data? i don't track the data as closely as i used to but the commercials usually let the market come back to them; they don't chase it. a reversal of that magnitude didn't make sense.

Disney raises admission prices. Is that inflation, stagflation, or both?

C.Note, it's Mickey Mouse.

super-kala-fragilistic-expiali-FLATION?

Not sure the timing is great- just as the consumer caves they hike? See if it sticks. I am out of DIS for now.

Hey Stockman, Mickey's gotta eat too.

Anyone follow the MAX Pain Theory for Options?
Or follow JPM?

I noticed that the Max Pain price for JPM is quite a bit lower than here...

So either
(a) someone has bought a lot of calls
on JPM and is on the right side of the trade

OR there is a "surprise" coming from the FED- and it will take a hit before Aug options expire.

Consumer credit rose 10.3 billion to 2.19 trillion following a revised 5.89 billion increase in May, Bloomberg

volatility has contracted on several time frames. the broad indexes along with several key sectors are showing pretty tight patterns on the daily charts and i guess it goes without saying that we break out or break down tomorrow.

the market is at one of those critical junctures; my guess is that all the black boxes out there are flashing green to their operators and these are high stakes.

whether or not the fed raises is one thing.

i think they need to talk tough and say they're afraid of inflation, that they'll be ever vigilant and will not blink when confronted by the enemy of rising prices.

well, actually, i think the fed is kind of irrelevant and that this thing is going to sell into expiration no matter what they do.

tradesman, i'm not sure what the max pain theory is but i think a person could try shorting strength on JPM although it does look like it's shown some decent relative strength in the rallies. a lot of times it's easier to short weakness.

And here's what Ms. Tanier had to say about the Consumer Credit figures:

"Actual $10.3B
Consensus $4.0B
Consensus Range $3.0B to $6.0B
Previous $ 4.4 B




Highlights
Consumer credit rose sharply in June, up $10.3 billion and led by a $6.7 billion rise in revolving credit that followed a $7.4 billion increase in May. The data suggest that consumers, with slim savings at most and evermore limited access to home equity loans, may be turning to their credit cards to finance purchases. Nonrevolving credit was also higher in the month, up $3.6 billion and reflecting improved month-to-month auto sales. Consumer indebtedness has not been a major factor in the economic outlook, but high interest rates and soft job growth, along with limited borrowing alternatives, could begin to bite down on spending."

That sounds good, right? ;)

ONE FOR ONE

RE consumer credit, specifically credit card debt....There's so much talk about the resetting of home mortgage rates, but let's not forget a couple of things regarding our beloved plastic: (1) many of those teaser rates for credit cards are tied to timely payments: miss two and you go from a 4% rate to 18%+; AND(2) some of those card issues give themselves the right to increase your rate if they do not like your credit report. (Yeah, I'm a nerd and I read the fine print). One more avenue of pain for the consumer to travel.

Tradesman,

So what is Max Pain theory? I'm curious.

The one thing I'll say about reading stuff into calls and puts is this: it may work sometimes, but I don't know if it's tradeable data due to synthetic relationships. Long calls + short stock = synthetic put. Basically, you can see a massive rise in calls but it could be for two reasons: bullish bias and someone's buying a lot of calls, or bearish bias and it's part of the synthetic put relationship. Who knows???

Re: Max Pain Theory

BWB... have a look at

http://www.iqauto.com/cgi-bin/pain.pl

Thanks Tradesman,

Interesting theory. Don't know how reliable that would be, but interesting nonetheless!