Big Brother Is Watching You

by Larry Levin

George Orwell's novel, 1984, was a scary description of a totalitarian society in which the government had almost total control over the people. Although it hasn't gotten to that point now, it is starting to feel like this is the current direction of the capital markets in the US . Oil too high? It must be the speculators! Government will stop them. Stocks going too low? Government will stop it. Short sellers are making too much money? Government will stop them. How? Big Brother is watching you!

Near the top of Congress's hit list these days are oil speculators. Politicians do not like the higher prices; certainly none of us do, but Big Brother is considering making oil speculation illegal. There are currently twelve bills roaming through Congress that want to put an end to only ONE side of speculation - buying. Short selling oil, as I understand it, will be allowed. How convenient.

This is another example of Congress disliking the free markets when the free market doesn't yield a result that meets their approval. So now it must be stopped. Of course the morons that somehow get elected also have no respect or need for history, for history has proven speculation bans to be disastrous. Apparently Congress was filled with shortsighted, stupid, brain-dead, pandering lawyers in 1958 --- just like we have today.

With no speculators to blame, shouldn't onion prices be the nirvana of all price models? Hadn't Congress, with its omnipotent wisdom, made wild swings a thing of the past? In a word: NO! In fact, onion prices experience wild swings far more gut wrenching than that of oil prices. According to the U.S. Department of Agriculture, onion prices soared 400% between October 2006 and April 2007 when bad weather reduced crop yields, only to crash 96% by March 2008 on overproduction and then rebound 300% by this past April.

That sort of price volatility is INSANE! Why doesn't it happen in oil, corn and equities to mention just a few markets? This extreme volatility doesn't occur in these markets (and all others) because of - wait for it - wait for it --- SPECULATORS. Individuals who have a strong belief that a market will rise (like oil today) or will fall (like equities today) are actually helping stabilize the markets. Moreover, they are willing to put their money where their mouth is.

Oil did not reach $149-barrel because of speculators. Did speculators ramp up the Indian economy? Are speculators responsible for the no drilling policies of the USA ?

Are speculators putting 9,000,000 new vehicles a year on the road in China ? That's quite an increasing demand for gasoline, wouldn't you say? Is the current Iran/Israel strife the fault of speculators? Have speculators spent the US into such a massive grave that it can't crawl out, thereby destroying the US dollar, or was that Congress? Is it the policy of speculators that keeps real interest rates negative, which is spiking inflation, which is going into oil prices, or is that the policy of Federal Reserve? Of course, speculators have nothing to do with any of this. It is simply a sickening witch hunt to make the clueless slack-jawed voting yokels happy.

But you can't reason with a Congressman. They have to blame someone; and as sure as the sun rises in the East, it isn't going to be themselves. So get ready for another dim-witted law to hit the books and be careful if you are buying oil futures: Big Brother Is Watching You!

Real Time Trading Signals*for

Trade Date: 7/17/08

E-Mini S&P Trades*
(before fees and commissions):

1) OTF sell @ 10:30am at 1249.50 = -1.75 (1 lot)

2) OTF buy @ 11:30am at 1247.25 = -1.75 (1 lot)

3) TP buy @ 1:35pm at 1258.00 = -1.75 (1 lot)

4) Algorithm trades (12)...combined total...+13.00


E-Mini Russell Trades*
(before fees and commissions):

1) Buy @ 9:22am at 688.6 = +.3 (1 lot)

2) Sell @ 9:47am at 688.0 = +.2 (1 lot)

3) Buy @ 12:00pm at 685.4 = +.4 (1 lot)...+$90


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