Notes on positions for members:
I’m sorry i didn’t get to finish the LTP review. The market got crazy and that thing with the mortgages came up Wednesday which caused me to pull an all-nighter trying to figure out what was going on which led me to conclude that the markets were about to collapse. This is what I do to protect my own virtual portfolio – study, study, study and sometimes I have to prioritize. As fast as I read it still does take a lot of effort so I’m sorry AND not sorry at the same time as I think arriving at the correct market call trumps specific roll recommendations.
Please take a good look at the LTP and feel free to question the logic of any rolls or covers you see. I pretty much covered everything that made sense to cover, mostly with Septembers (on new covers) as I’ll be away and it’s less hassle but, ordinarily, I hate to give my callers more than 30 days to cash in. The structure of my current virtual portfolio is not aimed at making money in either direction, my goal is to be about neutral when I get back on the 20th but I will take action as appropriate.
Most of my callers/putters have 50% hard stops on them, which I hate but not as much as I hate giving someone a double! My other positions seem well balanced enough – I figure if they survived this week, what the heck else can the market do to them?
It’s one thing to call for 12,500 as a "necessary correction" and quite another to see it happen. I take no pleasure in being right about a crash but it sure beats being wrong! My original correction call was for 11,500 but that was way back in November and we did correct to 12,000 so I feel satisfied with that but this run became unhealthy when the PPT wouldn’t let the market correct below 13,500 in June and the run to 14,000 was pretty much a joke given the economic environment. The more you put off a correction, the worse it can get and if 13,000 doesn’t hold I think 12,500 is a certainty. Understand (for all you 1-min chart watchers) that not holding 13,000 means breaking below 12,900 for more than a day, not skimming to 12,995 in intra-day trading!
Take the levels on the big chart very seriously, although they are getting old (about 3 months), I put a lot of work into them at the time and "Must Hold" means MUST HOLD! Think of the barrier between red and green like an average water level. There are two possibilities:
- One, that the Hang Seng, which is still in mad breakout mode has punched a green hole that the rest will follow.
- This is much less likely if the HSI continues to retreat and it is taking a very scary rest at 22,500, a point at which the Chinese version of the PPT seems to be earnestly defending!
- I always suspect Hong Kong is manipulated but I simply can’t research it the way I do the local markets. I’m not even going to talk about the Shanghai as I’ve only recently been unblocked in China but (insert sarcasm font here) I am sure that there is nothing funny going on there!
- Two, that the Nikkei, CAC and FTSE are leading the red brigade straight down to Hell.
- Either the DAX confirms by falling through 7,300 or the other 3 claw their way back to green and signal a possible turnaround.
- The US is 25% of the global economy, Europe is 25% of the global economy, Japan is 12% of the global economy. China is funny because they are just about 8% of the Global economy but, on an internally weighted basis, they are bigger than any of us. Anyway, none of these markets can do well for long in isolation, despite what you may hear your Congresspeople say on C-Span…
That’s the big picture for now. I’ll be talking to people from all over the World for the next two weeks (you don’t think I take these trips with no ulterior motive do you?) to suss out what the real situation is from the perspective of actual people, albeit fairly wealthy ones…
When I travel I head straight for the shopping districts (local, not tourist) to see what people are buying, to find out what rents are like to ask business owners how they are doing to tally up which types of stores are doing well and which have gone/are going out of business, etc (you can send condolences to Tina if you wish, I know it’s a nightmare traveling with an information junkie!) so hopefully I’ll come back with some good insights. Obviously next year will be the Olympics in China but I’m sure I’ll meet plenty of Asian travelers on this trip!
I hope everyone has a very happy August but it’s not like I’m really going anywhere – all part of the weirdness of the World we live in as I’m old enough to remember when my English grandparents would have a heart attack if I wanted to phone a friend in the states (and you had to have an operator assist you with a VERY expensive call) whereas now, if I had the same computer set-up, I could sit in a room anywhere on the planet and perform the same job I do at home.
On a global scale, think of the quantum leap in productivity that makes for the "captains of industry" the CEOs (who are generally fellow workaholics) who used to lose a day here and a day there flying to meeting and conferences and would be out of touch with the main office for days at a time. How much value does the ability to do anything (information wise) from anywhere add to global corporations? Now wonder our "service economy" is able to thrive, we have driven efficiency to levels never before imagined and that does give me great hope for the future!
All the best,
– Phil
