Overseas markets have continued to melt down unabated for weeks now. The Yen carry trade is dead and anyone caught in it has been trapped. And now numbers coming out of Europe continue to reinforce sustained recession with no exit strategy in sight.

The million barrel oil drawdown was confirmed by the Energy Department, which has so far kept crude prices elevated. But the summer demand will continue to slump shortly, reversing the pricing and exacerbating melancholy market sentiment into depression.

Oil futures are solidly in backwardation. Demand is slacking, as indicated by the ISM numbers and European country statistics. Throw on top of it all the energy revolution taking place in North America, and this summer sometime we’ll see a hemorrhage.

For the moment, I’m taking it two ways, as my long sell off and my “hedges” lose me money every single day. But EUO and SCO will prevail, into a summer selloff. I’ve been here before.

Per the course, some dipshit(s) is loading up on oil going into the teeth of the summer slowdown, keeping steady pressure on the contracts. Who exactly it is that thinks buying crude oil while inventories are undergoing surprise builds and PMI is missing expectations, I cannot say. All I know is that this is cliché.

The market is rolling over and some genius is trying to strip down my shield and use it for a wake board on a lake somewhere.

The euro is also hitting pressure around that 1.3 area. Look, Europe is inevitably at the heart of this slowdown. Their unemployment and economy issues are what is derailing China. Japan is front and center, but Europe is always lurking in the background.

If we slow down, there is zero chance that the euro can hold this strength.

On the positive side, CLP shook off analyst downgrades and lawyer harassment and rallied more today; mostly because it’s a good deal.

I don’t know what it is about the bar exam that turns people into sociopaths – I don’t want to know. The truth is, I actually hope these law firms piling on fiduciary inquiries succeed in getting MAA to pump up the offer, just to seal the deal. But when it’s all said and done, the lawyers pushing this harassment of CLP’s management should seek professional help.

Excuse the lapse of writing, particularly during such an eventful day as yesterday. A family member realized some damage to their house from the wind storms that struck Wednesday; missing shingles, broken trees, some little things like that…and I said I’d help them out.

Today, I’m rather tired and, since I forgot to apply sunscreen, baked like a manicotti.

My outlook on equities remains cautionary. I have a large cash position and ample shorts with SCO and EUO that give me, I feel, a 50/50 cash/invested stance. My longs are AEC, CLP, CCJ, BAS, RGR and silver.

AEC was hammered yesterday, one of the top losers in the market. They announced another secondary, which they’re using to get their debt lower. AEC executives I believe are very concerned about the ability of interest rates to hold. They have been for over a year now. And not just for interest rates from treasury yields, but also there have been subtle drops of fear about what would happen if a push to reform Freddie and Fannie upended the new loan origination process. So possibly expect more dilution. But, earnings are set to improve from the move, FFO remains strong, and as long as they keep pushing the business towards expanding operations (California is their big push at the moment), I will be willing to stomach some stock sales.

By some marvelous act, I managed to breached my prior account highs today, without even being full long in the markets. It is a queer thing, sitting on 30% cash with SCO and EUO and yet still discovering that you’re making money every day.

I’m not greedy – if this bull market could last forever! I would be more than content to sit here collecting half a percent every trading session.

The errors from 2011 are now fully behind me. I lost quite a chunk of my money on a bad oil short then (it was much larger than the one I’m carrying now). That was the first big oil implosion after the 2008-2009 near total collapse, when it fell from almost $110 back down to inside of $80. I didn’t take my gains, instead believing that we were experiencing an epic slowdown (EU). It wasn’t long after that oil completely rebounded.

Energy markets nowadays are prone to sudden collapses that are immense in size. But they don’t last. There’s not resetting based on demand or supply. Rather, buyers pick themselves up from the beatings, quickly absorb the additional supply, and force the price higher again. It’s hard for me to imagine how this is going to work out, undisclosed bidders buying $100 oil when the US is quickly becoming a stable production powerhouse.

But for now, the name of someone’s game is to keep oil elevated. There are so many speculations for why this might be the case, it doesn’t do well to even start getting into them. We are nearing another crash, I feel. Multi million barrel inventory builds going into summer can’t go completely unnoticed. But after the quick money has been made, I’ll move on fast. The price will probably recover going into the fall, after just a few short months; nothing but a blip, in the grand scheme of things.

The old rules of thumb about the oil markets have been turned on their heads. If it escaped your attention, for the last few years, wisdom that summer carries with it higher prices from more demand have been great…if your goal is to lose money.

Because what has actually been happening is each year, the summer brings with it renewed fears about the sustainability of the recovery, and as the winter optimism from holiday activity slumps, something – maybe speculative buyers in the oil markets, maybe something more complicated than that – slackens and all of a sudden, we get this big rush of inventory that floods our storage centers.

And anyone caught calling plays from their grandfathers old book goes long oil at exactly the worst possible time.

The thing is, for whatever reason, it always seems to get bought towards the end of summer, right when the rule of thumb dictates that oil demand should be falling. Maybe it’s all part of a game. Maybe there’s some reason for it I just don’t understand – I guess having selloffs in the winter months are always more dangerous; what happens if something important, like heating, gets disrupted?

I may not know why this is happening, but I don’t need to be an oil industry expert to know what my eyes are telling me.

SCO is spiking up 5% today, and oil inventories are building quickly. For the moment, everything is just peachy in the markets – actually, in the same day I’m up 5% shorting oil, the rest of my holdings are all largely green.

But it won’t last. We are on the cusp of a nasty selloff that will bring some humanity back to investing and some shame back to the arrogant.

And it will be treated as the end of the world. Or at least until the fall, when buyers likely step back in, claiming “no way that happens ever again…”

There wasn’t much need to, but I took profits in the RGR and BAS shares I most recently purchased on the last “selloff”. The RGR shares were bought on 4/4 for $48.03 and the BAS shares were bought on 4/26 for $13.03.

I unloaded them for $50.78 and $13.98, respectively.

I also added to my SCO hedge for $37.30.

Even if I wasn’t expecting the annual recession scare(s), energy demand is clearly falling, and since most of my book is in CCJ and BAS, that leaves me exposed. As I believe this is the start of the next washout, it just makes sense to bunker myself.

Net equivalent cash position now stands north of 50% again, counting on EUO and SCO hedging.