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. 

HAPPY EVERYTHING? GREETING CARD THOUGHTS

Ok, I want to apologize now if you sent Goatmug and the kids one of these, but as I am sitting here on Christmas Eve it is important for me to simply vent.

Yesterday I opened the mail and found to my pleasure a stack of cards wishing my family well during the Christmas season.  Believe it not, this is one of my favorite things to do in November and December.  I get excited to see family pictures of friends and clients and see how they are changing, how much their kids have grown, and the cool locations they choose as a background for the photos.  My heart was warmed by getting to see at least 10 of these yesterday. 

As I opened two of the cards though I was disturbed by the message of the greeting.  Emblazoned at the top was "HAPPY EVERYTHING".  Personally, I am a pretty happy guy as I'm a glass half full optimist (unless looking at business plans and small business projections for sales-they are always too optimistic).  I'm not sure if I need someone to wish me to have a happy everything..... whatever that is.  The Goat has a deep faith in Jesus Christ and as you know believes that Christ is my Savior.  Given that, you can imagine that I feel strongly that the Christmas Season is really about the birth of risen Lord!

So, in this age of "everyone is offended", am I offended?  No, Goat is simply just struck by the notion that we as a people and nation have become so sensitive to the overwhelming potential to offend others that we go out of our way to neuter anything special or unique in our own lives, faith, or identity.  In fact, we are so cognizant of the fact that others might be offended that we censor and eradicate any outward signs of our very own lives, faith, or identities.
Now, I understand the motivations behind both of the people that sent the cards yesterday.  In the first instance, the lady is a realtor and she is a very business savvy lady.  Clearly her objective is to keep us in our minds and say hello, but since she sends that card to hundreds of folks, her strategy is to simply say "Happy Everything" to appeal to everyone.  In my mind she frankly does the opposite.  By appealing to everyone she appeals to no one.

Have you ever seen the movie the Incredibles?  In the movie, the bad guy named Syndrome has a great quote.  He is lecturing our super hero and says, "When everyone is special, no one will be".  And in the case of the cards, I think the realtor is so bland and unoffensive, she becomes unspecial.

The second card I received was sent by a family of non-practicing Jews.  I know that they are sending these cards and attempting not to offend anyone.  But I personally would relish a card from them that proclaimed Happy Hanukkah, not because I'm Jewish, but it would suggest that they were truly ones that identified their faith as a core part of who they were and wanted to share a unique blessing with others.  This special blessing is more meaningful as it were to come from them and would be a message that was truly special.

My family did also receive a neat text message from some old friends that happen to be Turkish Muslims.  Guess what they sent in the text?  You got it, "Merry Christmas".  Can you believe that, one of the folks from one of these "minority groups" sent me a text telling me to have a Merry holiday and actually named it Christmas!  I think that is the pure genius of their simple note.  These people understand that this time is important to me and my family, therefore they sent me a message "in my language".  Were they offended sending it?  Absolutely not.  Am I offended when I speak with my Jewish clients about Yom Kippur, or Hanukkah, what about my Arab clients when I ask about their fasting in Ramadan?  No, I acknowledge their faith and celebrate that unique part of them that makes them different.  My clients love it that I have an understanding of their beliefs and have an interest in them.

So ultimately my point here is that we Christians are entitled to hold dear our beliefs, traditions, and holidays AND express them.  We have the right to proclaim our blessings and wishes just as every Jew, Muslim, Buddhist, or Atheist has to their own holidays.  Many of our original 13 colonies were founded on the basis of the need to celebrate the expressions of our colonists' own religion without the tyranny of those that would suppress it.  While there are forces in the United States that attempt to deny our public expressions of faith (ACLU, etc) while championing the rights of Muslims to pray and express everywhere, the biggest culprit is our own cowing to the loud demands of others to limit the outward signs of our beliefs.  Unlike the colonists that suffered from kings that demanded a certain faith, it isn't a tyrant that is suppressing our religious beliefs it is our own fear of offending that causes us to omit the expression of our faith and our proclamation of it.  Ultimately the eradication of the public expression will lead to the obliteration of the observance and belief in faith in all but the most devout believers.

So as I am off to church to celebrate the birth of Jesus, I wish you a Merry Christmas and I sincerely wish that you fully appreciate the love of the Father who gave His only Son for us as a sacrifice to atone for our sins.  I pray that if you don't have revelation of this love that you ask Him for it.  I have confidence that you will receive it!

MERRY CHRISTMAS!

GOATMUG