Friday 30 December 2011

Final Friday of 2011.

We ended the year almost exactly where we started it. 2010 year end SPX was at 1257 and 2011 year end SPX is also at 1257. And the whole year I was possibly the only one shouting that we are not going to see a repeat of 2008/9.

In between we had Euro crisis, tsunami in Japan, nuclear leak and radiation risk, uprising in Middle East, debt drama in Washington and countless stories of end of the world and collapse of the monetary system by doomsday prophets. I personally think that it not the debt of the world but the bomb of the mullahs which will tank DOW. But I also think that it will not happen in 2012. Don’t get me wrong. I think we will see DOW 5000 but I differ as to how and when we will reach there. In the mean time, there is money to be made on the long side as well.

Yesterday I wrote that the last trading day is going to be bit iffy. The market churned around in a small range and the selling occurred in the last 30 minutes.  Sort of cleaning the book. I would have been happy to get a green end but nonetheless, the uptrend is well intact. This rally started from 20th December and I am long from 19th. I am not happy with my position of TBT but otherwise I am OK. I think there are few more days in the coming week for this rally to complete its course.  On December 26, I wrote ( ) that a typical Santa rally consist of last five trading days of December and first two trading days of January.  If you look at the close-up of the last year (December 2010 – Mid-January 2011), most of the gains of 2011 came in the first fortnight of January.

I do not see any reason why it would be any different this year.

The short term cycle top is next week. So I will be playing it very fine. I will Tweet immediately to the readers whatever market action I take. On the other hand AUD is showing good promise with a target of 1.0325 next week.

So I am not very keen to go short immediately either. 

Not much should be read in today’s market action. It is just too much of a coincidence that the SPX closed exactly where it was at the end of 2010. Whoever believes in efficient market theory must also believe in tooth fairy.

For those who are fairly certain of the breakup of Euro, I have some news. The commercials are net long Euro in a massive way. We are likely to see a short squeeze sometimes in January which will hurt lots of bears.

So far as the recession in USA, I would present two news reports;
·         Baltic dry index is showing growth.

So let us trade what we see, not what we believe.  We cannot afford to be permanently long or short based on our bias. At least not I.

I take this opportunity to thank you for reading my blog and following me in Twitter (@BBFinanceblog). I hope you will continue reading and recommend it to your family and friends as well.  I wish you and your loved ones a very happy New Year. 


  1. bbfinance 2012 part of my profits going to charity in ur name.

  2. Thank you my friends. All good karmas will come back to reward you.

  3. Hey bb, first time poster. Thanks for your blog. How do you know that commercials are net long the Euro? Where are you getting this info? thanks.

  4. Every Friday the COT report gives all the info. You have to chart them out on a regular and ongoing basis.
    Thanks for reading my blog.