China’s big rate announcement and other saber rattling from central bankers sent the market higher this morning, but now the gains are starting to retrace into the afternoon.

This is classic central bank trading.

After all the other rate and QE announcements I can recall, we experienced the same behavior – a big immediate push followed by a strong settling (and even occasionally the markets correcting lower). Historically, this lasts for about a week before we take off like the Hounds of Hell are hot on our heels.

On the news Brent is back above $80, and WTI is following. We’ll get about a week (half week for the holidays?) of puttering around, probably lower. This is going to suck all the shorts and panic money into the fade (“They failed!”). Right in time for next Tuesday or perhaps the Monday thereafter, when approval to increase allotments gets pushed down from management and markets begin the happy process of murdering anyone caught short. Just in time for Christmas.

See you in December.

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Alright, today was a big day. I was up almost 5%. Strong moves in the oil and energy space and shorts unwinding. Leverage pressed the envelope. Almost everything I had ended higher, in a big way.

But it’s too early to celebrate. BAS is down almost 60% from the top. I sold out quite a lot of the position at the top, which is the only reason I’m still alive. HCLP is flirting with $50 again, but that’s a 30% drop from the highs (again, I was lucky as hell selling out near those). VOC is down 50% from the highs.

This isn’t enough. Big up days need follow through to repair the charts. Short sellers need to be checking their backs at every street corner. That’s the only thing that will scare the carrion birds off the backs of these stocks. And we need the price of oil to carry us along. We need Brent back above $80 and WTI needs to tag along playfully behind (but can’t get too close or the spread will be damaged).

The rest of the market is acting healthy and, despite the exact same concerns about the economy that have been there for five years now, there doesn’t seem to be a fresh wave of cascading data to fret over.

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The market may be down, but somehow I ended up a small sum. My account is up 3% today, erasing the nasty tumble I had play out over the past 48 hours.

I’m constructive in oil and energy names, but that applies more to energy services and complement plays than it does to pure oil bets. I’m also very adverse to deep sea drilling, because it’s expensive and easily priced out of competitiveness.

I’m getting excited about uranium for the first time in years. I’ve been enthusiastic up until now, but there was something missing. The fuel run is exactly what the doctor ordered.

Enjoy your weekend, my good man or lady. The 9th floor is closed for business, until Monday.

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The oil market is in the middle of another sharp leg lower. This is going to jolt the players and be painful. Today will not be fun for me. I’m going to have to grin and bear it and distract myself with a bag of popcorn and the spectacle of fifty million hardcore Democrats breaking down live on public access television tonight.

The impetus for the announcement might be, allegedly, a December price cut by Saudi Arabia to US markets.

This is the key takeaway here:

Top global exporter Saudi Arabia increased its December official selling prices (OSPs), relative to benchmarks, to Asia and Europe on Monday, but lowered prices to the United States, a smaller export market.

Which is to say that Saudi Arabia actually raised prices in December.

Guys, come on. Saudi Arabia’s oil market is Europe and Asia, almost entirely. They don’t sell diddly in the United States. Our oil comes from South America and Canada. You can easily check this via public records – the EIA, I believe it was, keeps detailed records about global oil sales, including by country of origin and destination.

If Saudi Arabia is lowering prices on little to no volume sold, then Saudi Arabia is not lowering prices.

In practice, this leg lower probably has less to do with Saudi Arabia and more to do with what is to be expected in a correction like this. This is not the first time I’ve been in a position that bleeds out, to see a moment of stability followed by more sharp bleeding.

APC comes to mind back when that oil well blew in the Gulf. Uranium prices did the same thing. And shares of gun manufacturers after Sandy Hook.

You get a big blowup, some tepid stability, then another collapse.

The second collapse is usually the best buying point. Usually…

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I sold off some of my NADL position for $5.96. I had added these shares on 10/15 for $5.43. This locks in a quick 9.8% gain on a small position sizing. It brings my cash position to 5%.

I’m sitting pretty here. So far, I dodged sizable losses by going to 45% cash in August. I also bought what looks like it could be the bottom in the oil and gas space, on margin to 115% of my account. I’ve since sold this bounce down to a 95% long position.

Plenty of my recent purchases are underwater, but I have a healthy profit margin baked into many of them as a whole. I also am closing back in on 10% gains for the year again with lots of room from the highs.

My expectation remains for more volatility and a small pullback ahead. I wouldn’t be surprised if this gets labeled a stock market crash after everything – that fits well with the frequency of market crashes in the US (albeit resting on a small data sample).

As for the oil and gas sector (of which I have a majority of my assets invested at this time) I think we’re near the end of the correction with perhaps room for one last shakeout.

If we crash lower, I will consider adding on margin again. But it will be a slow decision given I am basically fully invested.

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It will not happen immediately, surely. There will be more volatility and panic. But rest assured that the rout in the oil market will be unmade soon enough.

HCLP is already back to $54. You could have purchased shares for $40 just last week. The markets were scared, but then HCLP announced a 9% hike to its dividend. Now all is forgiven.

BAS is back to $15 from $11.50 last week.

ETP is above $65 again.

NADL is flirting with $6.

VOC has regained $11.

Those are big comebacks. I told you, the scare was not about a looming slowdown in the oil and gas space. It was more about frightening you into loosening your grip on the precious. Now that Jimmy’s friends have loaded up the trucks, we’re free to stop pretending like that Saudi Arabia rumor was ever anything more than the flapdoodle it was.

For the day I’m already up another 2%.

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