CHESSNOID

The stock market took a drop today. It actually opened to the upside and then those pesky oil supply reports came out. It shouldn’t have been a surprise but I think investors would be hopeful that it would be better than expected.

http://biz.yahoo.com/ap/080611/wall_street.html

Investors are uneasy about oil prices, which on Wednesday traded as high as $138.30 a barrel on the New York Mercantile Exchange before settling up $5.07 at $136.38. Having breached $139 a barrel last week, record-high crude has increasingly posed both an inflationary risk and a threat to growth.Energy Department data Wednesday showed that gasoline supplies grew last week but that crude oil inventories fell more than analysts expected. The weekly report suggested no letup in U.S. energy demand, even as consumers adjust their budgets to accommodate gasoline that averages more than $4 a gallon nationally.

The Federal Reserve’s Beige Book, which provides readings on the U.S. economy by region and arrives two weeks before the Fed’s next meeting, indicated that Americans are straining under rising energy and food costs. The Fed said the economy remains “generally weak.”

What this looks like is a consolidation of crude oil in the 130 range getting ready to form a base and jump into the 140 range. We already have had predictions that crude oil would be $150 per barrel by the 4th of July. Looks like that will happen sooner than later. The difficult part is trying to determine how much will a gallon of gas cost. It doesn’t break down to any mathematical formula. It really isn’t tied into any economic activity based on supply and demand. It really looks like the oil companies are just gouging us. I saw on TV the other day that a man in San Diego would go across the border just to buy gas. He said he uses his truck for work and that gas there is $4.50 a gallon but in Mexico it is only $2.75 a gallon, so he fills it up there. He is almost getting it for almost half the price by just driving an extra 10 miles across the border. That is insane. It’s obvious there is nothing wrong with the gas since he has been doing this for sometime and hasn’t had any issues with his vehicle.
The Arco gas station near my work that jumped to $4.45 a gallon is still the same. Across the street, the Shell gas station jumped from $4.49 yesterday to $4.59 this morning. This is all for the low grade stuff. I have a small economical car and feel very bad for those who have the trucks and SUVs.

Many economists have no idea how to get this under control. As a matter of fact they have no idea why it is really going up so high. These are the economists who claimed real estate would never go down either. President Bush has done such an amazing job in keeping our economy moving in the wrong direction that the next President should be able to do something to turn it around.

Unfortunately, I have listened to both Obama and McCain on their economic policies and I am not impressed. I don’t see either one actually having a plan to turn this economy around. The 3 things that is killing the economy right now is the unbelievable gas prices, the falling housing values, and the cost of food, basic necessities, and everything else going up. Neither Obama or McCain really deals with these issues directly. Cutting tax rates right now will do absolutely nothing to lower the price of gas, stabilize housing prices, or lower the costs of basic goods.

I am still playing around with that UpDown.com site and actually had a good turn for today. I was up and tried to sell everything at the end of the day with some limit orders but only 3 of the 6 took. I had the funds all in reverse ETFs so when the market tanked I wanted to go all cash. You can never tell which way the market will turn the next day so I just wanted to lock in the gains. This is my best month so far. If only real life was that easy.