Woo-hoo, here we go!
I'm back so of course the markets are flying up and oil is in retreat BECAUSE I HAVE THAT KIND OF POWER! Seriously, I feel great – the vacation was a great idea and I really do urge people take a real break once in a while. Not some little 3 or 4 day thing, but at least 10 days to do something totally different. It gives you a very nice perspective on things!
The Hang Seng is up a stunning 1,208 this morning (6%) but that was not the index that was in trouble. The Nikkei shot up 3% but finished at a still pathetic 15,732 – about 1,200 points lower than when I started my vacation 2 weeks ago. Like I said – PERSPECTIVE! India is up a couple of points making up 286 of the 844 points it lost in my absence but the BOJ injected $8.7Bn into the markets this morning, a move that would be proportionally like our Fed dumping $35Bn in a single day. That follows over $9Bn that the BOJ placed on Friday and the Aussie Bank added $2.7Bn today and boosted that market $4.5%.
What's cool about $8.7Bn is that it translates into 1,000,000,000,000 Yen – how's that for a headline in the Japan business section?
It may be fine for Blanche DuBois to say "I have always relied on the kindness of strangers," even Karl Malden could get lucky with a Trillion yen in his pocket, but the US economy is a harsh and demanding mistress and our leaders can piss away a Trillion Yen at breakfast and still have the balls to ask what's for lunch so I'm going to continue to urge caution until we see a real turn.
Option Sage just posted an excellent article on the subject so I won't rehash what constitutes a turn but it will take a lot to get me off my plan of cashing out much of my long side and waiting for the other shoe to drop. Happy Trading has not 1 but 2 parts to his weekly forecast along with a very clever call on XME, which we will have to look at later for a nice upside hedge should the BOJ's move prove too little to re-ignite the carry trade.
Again, I cannot thank Sage and Happy enough for carrying the ball for me while I was gone. It is one thing to fill in but it is quite another to put forth the kind of effort that absolutely excelled in guiding the members through 2 of the roughest weeks we've ever experienced!
I'm way behind this morning but I'll just say that I am very encouraged by Brent breaking below $70 in early trading which makes the WTIC pricing beyond ridiculous at $71.50 so we can expect a retest of $69.xx as the hurricane misses US targets (but should take out something in the Yucatan). We are pretty much out of energy here so I'd love to see a nice run up to short into but it looks like we'll be taking some long gassy plays along the lines of what we proposed in our last newsletter.
Gold is retesting $666 and the dollar is retesting the 50 dma at 81.40. The market needs a weak dollar to "rally" back as the 2% jump in the greenback was the uncredited catalyst to the global meltdown last week. Low dollar values and a flight to the "quality" of the dollar causing ultra-low interest rates despite high inflation and record deficits may not be something you want to count on for your long-term investing environment!
I have a whole article on sub-prime in my head but I still can't decide how it ends – hopefully I can get it together soon but the fact that I can't pick a direction is just another reason to stay in cash for now. Any bet you make in this market is GAMBLING and anyone who tells you they know exactly what's going to happen is full of it…
Barron's picked a very interesting week to attack Cramer as they follow a strategy we got bored with last year, which is shorting anything he recommends into the initial pop. Their report card on Jimbo shows him under performing the market by 10% but I can't even figure out how they are measuring entries and exits. The point here is WHY? Why now to pick on Cramer? Timing is everything with a piece like this and this timing is very suspicious.
I don't like things that smell of secret agendas – they make me want to go to cash…
Sensing a theme here?
We'll see what kind of effect the Fed really had with their little market gift but the energy sector can still drag the markets down with it and the Financials are still so tied up in the energy and commodity game that a burst of that bubble would have investors running to the relative safety of sub-prime investing so strap on the seat belts – we're in for a wild ride!
