Tuesday Top Off

This market just keeps going and going and going!

We took a little more of the table today but, on the whole, we didn't trigger too many of our trailing stops, a sign of market strength.

At this point in a rally it is good to maintain trailing stops, especially when you are heavily net bullish as we are.  The stops work both ways though as we also dropped half our DIA $131 puts on the morning dip, which worked out well as we also pared down the number of positions they were protecting.  TSO finally gave us a break and we got half out of that one with a 20% loss – at this point we'll be thrilled to end up even and try again next month!

Our morning selection, ABX, reported the kind of earnings that really confuse people as the company chose to spend 63 cents a share to get out of hedged contracts, leaving them free to sell gold at spot prices.  This caused them to report a loss of .18 a share against a .35 profit expected by analysts.  This is not a reason to sell!  Barrick produced 2M ounces of gold at $313 per ounce but had to sell it at $386 an ounce under the contracts they just cancelled.  "It's great news that they have reduced their hedges, because that was an albatross around their neck," said John Ing, analyst sand president of Maison Placements.  ABX, like NEM will become much more sensitive to the price of gold but anything over $600 an ounce will put more gold in shareholders' accounts.

Speaking of James Bond villains:

"Except for ABC, CBS, NBC, MSNBC, CNN, New York Times, the Washington Post, and about another 100 newspapers, I find little evidence of liberal bias in the media." – Rupert Murdoch

The big news of the day was Rupert Murdoch's further attempts to control the Universe by placing an unsolicited $5Bn bid for DJ, a 67% premium to the opening price.  The bid hit the wires at just after 11 and we tried to jump in but missed it.  Just 30 days ago I mentioned our man Rupert as the featured player in my Corporate Wars article.  We can't wait to see what will happen when the Wall Street Journal, Barron's, the Dow Jones Newswires, MarketWatch and SmartMoney fall into the hands of the man who's papers always give us the finest headlines…

The $69Bn NWS dropped about 5% on the deal, indicating investors here think this is more about ego than economics and it remains to be seen whether the Bancroft family will allow the deal to go through but I'm not sure they're organized enough to stop it and, with $3Bn in operating income, Mr. Murdoch can certainly put his money where his mouth is!

All this excitement sparked quite a market rally and we ended the day in pretty good shape with yet another new high for the Dow:

The real turn in the markets came at about 1:30, when oil's fall below $65 was finally confirmed and our beloved XAL finally turned up.  This is the move we've been watching for since last week so you can't say I didn't tell you so! 

The transports, of course, lifted the Dow as it went from the day's low of 13,041 to 13,137 in just 90 minutes.  As to what caused the sudden plunge in oil?  Perhaps it was the sudden loss of the Manipulator-In-Chief, Lord John Browne, who was forced to resign from BP.  Until the market is certain that Browne's replacement is willing to fake disasters and curtail supplies with no regard for human suffering it will be hard to be sure that supplies will remain properly constrained.

Gold fell back slightly but held the $670 mark, only $357 and ounce profit for poor ABX!  The dollar got off the floor at 81.50 and gained a whopping .18 which, IF it holds, could be it's best week since early March.

Well, I promised you an exciting week and it's only Tuesday!