Thursday 21 June 2012

Markets Hit By BullS--t.



For the better part of last seven days I am writing about a day like today.  From “ BullS**t Ad Infinitum” on June 14th till yesterday, I have been urging readers not to get caught up in the meaningless gyration of the stock market and for those of you who cared to listen, congrats for being in cash and safe. This is my two pence service to the ordinary investors who are regularly taken to cleaners by the Wall St. Pandits and various talking heads.

I have written on last Monday that if SPX holds 1300-1320 level by this weekend, we will see a higher high. It was a bold statement at that time, when indexes were ripping higher to talk about a lower level. And yet we are almost there now. Yesterday I wrote about 1365 by 1st week of July and a reader asked me if I meant 1265. I really meant 1365. May be even higher, up-to 1380. So it is a bold statement even now but  1st we wait to  see where it ends in a day or two. Tomorrow we might see a dead cat bounce before some more selling. Ideally I would like it to fill the gap on the way up which I have circled below.

As much as the up move was a fake move, you cannot trust this down move either. Basically we have been in a range for quite a while as highlighted by the rectangle.

How the folks are going to react to today’s selling? Till yesterday, there were talks of end of correction, start of new bull phase because the market did not sell off after the QE disappointment. Will they short the market again now that GS has recommended its clients to short the market with a target of 1285? If GS has recommended a short trade I would rather take the opposite route, more so when short term cycle is indicating a bottom tomorrow. Let’s keep in mind that cycles are not an exact science and the bottom may well come next week. But taken everything together, I do not expect a huge sell from here immediately. As I said yesterday, there is still Quarter end window dressing to be done and beginning of the month 401K money to be stolen.

I am holding to the GLD for now to see where it goes till the 1st week of July. I kept it as insurance, just in case Bernanke went crazy and declared QE. I do not expect it to do much till August but if gold falls below $1530, I will get out of it. On the other hand, I am thinking of taking a short position in Bond through TBT. That is going to be another long term play. Despite every effort Bernanke is making to keep the interest rate low, it will soon get out of control. Either interest rate goes up or inflation goes up. Bearded one has painted himself in a corner and may have only six more months. You see, I am more generous than Soros. He gave three months to the Europeans. I am giving six months to the Fed. I think it is going to far worse than what we have seen in 2008. This time there will be no country in the world to print and save.

I got quite a few response / email to my last night’s trivia and I must confess, you guys know your history. To sharpen your understanding of history, you may want to read the book” This time is different” .

Thanks for reading http://bbfinance.blogspot.com/ . Please forward / re-tweet / post it on your wall and join me in twitter. (Twitter @ BBFinanceblog)(Stocktwits: Worldoffinance)  

12 comments:

  1. Everything goes as planned :)

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    1. So far so good. Keeping fingers crossed. lets see how far this one goes.

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    2. What is your downside target for this move south?

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  2. I have already said. Pl. refer 1st line of 2nd paragraph. Will update tomorrow after watching the overnight /ES action.

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    1. WoW ! What a good blog to share, thanks for this information, the information is very helpful. Keep share such information always.

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  3. Nice commentary, cynical yet safe! If everything is about to go pear shaped and worse than 2008, wouldn't a far dated long put on the ES be a good trade?

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  4. Was hoping for more down today, but your Twitter actually caught the low today. Do you still think selling not over yet?

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    1. But I said yesterday that we may have a bounce today and no the selling is not over yet.Its in the 2nd paragraph.
      We have a bear flag now. We will re-assess around 1300 +/- few points.

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  5. Are you seeing more weakness early next week, then bounce to the 1265 area by July? Thanks!

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  6. Hi, I am also from Toronto.

    I agree with your view that this market is bull sh!t. Next week will be a wild and suicidal week and in the spirit of sharing I would like to alert everyone of a potential head and shoulder formation in the making. Monday and may be part of Tuesday building right shoulder top at either 1354/5 (or 1348), Wed & Thursday and may be part of Friday dropped to neckline and breakdown all the way to 1287/8 (or 1302/3).

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