GASOLINE TRADING UPDATE - SELL IN MAY?

Just wanted to drop a new post in here and touch base.  I am one day away from being back in the saddle and being able to make much more frequent posts.  I've been absolutely slammed with projects and the amazing moves in the market.  This post is important because I have a large position in gasoline on and this post would suggest that it would be appropriate to close the position on May 1st or May 15th of the coming month.  While this is about a month or so earlier than I had anticipated I am open to hearing reasons why I should exit and these guys have a great long term track record.  The posting is from FMXconnect.com and appeared on Zerohedge.

I did not post the entire article, you can click on the zerohedge link below and find it for yourself.  It continues to elaborate on other timing trades on the gas trade and on crude in general.

Funny, the sell in May theme is sounding it's alarm again.  If you recall in the 2011 Outlook I suggested that this clearly is a year to sell in May.

http://www.fmxconnect.com/ and http://www.zerohedge.com/article/guest-post-crude-oil-gasoline-seasonal-tendencies

Overview: Crude Oil and Gasoline Seasonal Tendencies

As we start this new year, a number of events are likely to occur along with the normal changes in the weather. January gasoline is typically the lowest in any year and, despite the common mythology, gasoline consumption does not normally fall steeply after Labor Day and then recover miraculously after Memorial Day.

We do see an element of driving disappear after Labor Day, as drivers in the 16 to 25 year-old age bracket tend to drive less, or at least more predictably. Family vacations are also over by that point, as a general rule. But, there are pockets of demand during foliage sighting season and Thanksgiving Weekend is always the best four-day driving period in any year in which July 4th does not fall on a Tuesday or Thursday.

There is usually good driving through the month of December into New Year’s Eve, but it traditionally falls off a cliff right after the champagne glasses touch to ring in a new year. People park their cars and drive to work and school and to appointments. But it is not until March or April that more discretionary driving normally returns.

Refineries know this and they typically plan maintenance turnarounds from January through April or early May. During this period, there is a definite tendency for gasoline inventories to be drawn down; even though demand starts the year at its lowest levels, the maintenance usually goes on long after demand has started to mount a comeback.

Market Reaction

The market reaction is not what most people might believe. Regardless of the overarching trend, prices have a long history of advancing from early March through the middle of May. Despite the fact that the so-called “Driving Season” starts with Memorial Day and peaks on Independence Day, most of the buying has come into the market long before the end of May.

Gasoline Seasonal Trade

We are now trading “RBOB,” but it is effectively “unleaded gasoline,” and we include its history in all its various incarnations, from leaded regular to unleaded to oxygenated to RBOB. The tendency for prices is to advance from early March. Following the loose guideline of buying in the first two weeks of March and selling sometime before May 15th, the seasonal tendency has worked in 25 out of 26 years - or 96.15% of the time. It is the strongest and most reliable seasonal tendency of any commodity futures contract.

Over the years, various specification changes seem to have helped. In 2003, prices rallied through March - in the leadup to the invasion of Iraq on March 19th of that year - and they then dropped into May. We advised against following this seasonal that year, as we saw prices advancing in January and February as it became clear that war with Iraq was coming.

Despite 2003, buying in March has yielded profits consistently. The buying part is a great deal easier than the selling part, but profits are there to be realized if one uses money management techniques and starts to take profits as soon as prices get overbought in May.

The following table shows whether one could have bought June gasoline futures on March 1st and then have been able to sell it at a profit at some point in the first two weeks of May. As one can see, there were profits available in May every year except 2003.

TABLE (http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Screen%20shot%202011-04-24%20at%204.30.24%20PM.png)

Have a blessed Easter, knowing in your heart and mind that Christ died for us to save us from our sin.  Without the shedding of His blood we would not be restored to the Father.  We did not deserve the sacrifice and it was not earned, it was given out of love.  His sacrifice was made out of obedience and submission to the Father that knew you and loved you before you were born.  I proclaim faithfully and with great joy, HE IS RISEN!  It is only through a relationship with Christ that Goatmug is alive today.  Thank you Jesus for your love and obedience.