Talk about a week that flew by…
It's been a wild ride and we came off a very good test of the 200 dma at 13,350 and broke right out over the 50 dma at 13,567 like it wasn't even there yesterday and finally the small caps are coming along for the ride (of course on the very day I sell some short in a spread!) as EVERY SINGLE SECTOR of our economy, including builders and banker and brokers and commodity sellers and retailers and big caps and importers and exporters and consumer staples and consumer discretionary and telecom and healthcare ARE DOING GREAT!
That's right, there's obviously nothing wrong with the market, the economy, geopolitics etc. and gold is up at $800 because it's pretty, not because it's an historic signal of economic unrest and oil is up at $90 because we are so healthy we can afford to splurge on expensive energy drinks for our cars (hmm, doesn't that make HANS a buy too?).
I guess I'll have to spend the weekend making a list of everything that isn't nailed down so we can buy it as that's the only logical move in this kind of market. Make no mistake about it, I'm going to be either covered or cashed by expiration week but that's 6 glorious days away and for now we can once again party like it's 1999 as we added 94,000 jobs which means, one would think, that a rate cut would be idiotic at this point but idiotic is just perfect for this rally so we'll take it!
We are going to igore the fact that the the Hang Seng gave up the whole week's gains after lunch, plunging 1,120 points off it's high because that might lead to negative thoughts and thinking in general is ill-advised if we are going to enjoy this rally. Of course I said it would take them 36 hours to figure out that China's money tightening would be bad for stocks exactly 36 hours ago but that would lead to more thinking so we'll just enjoy the FXI puts we bought yesterday and pretend that both that and the Dow gains make perfect sense.
There is no way we want to talk about Japan as it's soooooooo depressing with a 33% downward revision to an already sluggish Q3 to 0.4%. "Given those negative factors, the Japanese economy could fall into a recession in the near future," said Hiroshi Shiraishi, an economist at Lehman Brothers. Yeah, and he wonders why he's not invited to our party! What's holding up their whole economy at the moment is exports based on strong US demand despite the weak dollar – what could go wrong? With rates at 0.5% already we can only hope the BOJ follows our Fed's logic and starts paying us to borrow money – we're just 3 quarter-point cuts away!
The IMF is cutting 15% of it's staff, hopefully to come to our party, as that institution is being taken apart in favor of "Sovereign Wealth Funds" which have the great advantage of answering to no International Governing Agency – what could go wrong?
Europe is in a party mood and things are pretty good over there with 1% gains across the board ahead of our open. EU markets are being driven by a constant stream of deals with China, Inida, Russian as well as the Arab nations who find the US fairly inhospitable as an investing environment as jingoistic protectionism isn't quite the party game it sounds like. On the whole, it does my heart good to see the whole world working together in peace and harmony – I just wish we were a part of it.
Speaking of our fearless leadership, this isolator-in-chief did manage to pull of a coup (no, not the one where he stole the election in Florida!) and got a very warm reception as he rolled out a mortgage plan that has little to do with the government but does seem to have been arranged by them. As Cap said yesterday in member comments: "Let’s all pat ourselves on the back now in front of the cameras for our hard work in setting up a toll free number." In typical Bush fashion, the President gave out the WRONG NUMBER, but, that's our leader – just hide all the sharp objects and he'll be fine!
Anyway so it's towelie time again because I have no idea what's going on but the markets wanna get high and we're not going to fight to tape. I'm keeping my index puts and lightly covering them by selling out of the money puts against them and continuing to short oil into the weekend following our new rule that we aren't wrong, just 36 hours too early with our calls but it's nothing a weekend of heavy drinking won't solve.
You have a good one,
– Phil
