Monday, 2 July 2012

Cake Is Getting Baked.


Well, nothing new to write anyway. Its baking time and we have to be patient. While SPX and Nasdaq eked out small green, DOW was in red. McClellan Oscillator in the mean time is trading the danger zone.

But that does not mean that prices cannot go any higher. It is half day trading for tomorrow and closed tomorrow.  So we will have to wait and see where it all reaches by Friday. I hope it goes up and reaches the level of 1380 in SPX which will be a safer place to take any position. In fact lots of things have to line up before we can shoot. I would love to see SPX at 1380, Gold at $ 1650 and Crude at $ 87 by coming Friday.

I am little disappointed with the price action of Gold but with US$ higher for the day, what else can we expect. Crude was also marginally lower. As I have said before, I plan to get out of the GLD in the coming bounce, the final of which I would expect in the next few trading days.

The earning season starts in full swing from next week and it may not be pretty picture coming out. There is no growth story anywhere and borrowing and spending does not mean growth, whatever Hollande may say. If history is any guide, France has always been terrible with money management and unlike their Northern neighbor, the Germans; they refuse to learn from their past mistake. And every time they say “This time is Different”. No wonder France have had sovereign default (9) Nine times in history VS. (3) Three of Germany. Even those three defaults came because of the world wars, in which Germany lost. If I have to put my money somewhere in the World I would chose Canada and Germany. Switzerland or Singapore is too small to withstand global economic shock.  Or even buy income bearing real estate, which will generate income and most likely get back to the original valuation in 5 years time. Everything else will result in loss of capital.

Coming back to short term market movement, Crude is another possible short candidate when it reaches around $ 86.50 or $ 87 level. Chris Kimble has this nice chart to share.

Last but not the least, few days back when GS recommended taking a short position, I wrote that we may be due for a bounce. Today GS closed its short position after hitting 1365. So now it may be safe to short. And it nicely lines up with my earlier call of 1365 by the 1st week of July and a potential top. Is it a coincidence? Possible but more likely, we are getting the manipulation pattern right. Just to be on the safe side, I would like to see 1380 please. Please ?

Thanks for reading http://bbfinance.blogspot.com/ . Please join me in Twitter (@BBFinanceblog) and do re-tweet, post it on wall and share with your friends and circle if you like it.
Posted by at

10 comments:

  1. Anonymous2 July 2012 at 18:51

    I really appreciate your post and your excellent sense of the market. Very useful. I am no expert in history but a quick research showed that France effectively defaulted 9 times with the latest in 1812. Germany that was united later defaulted 9 times; 3 times in the 20th century for the reasons you pointed out and 6 more times if we include Prussia, Westfalia and other states, and we have to include them in the total.

    ReplyDelete
  2. Unknown2 July 2012 at 22:29

    It's amazing that now everywhere you look, TV, blogs, all have turned super bullish. What are your views on the ECB meeting on Thursday and Payroll number on Friday? Do you see any possible surprises there? Now they are saying more easing from Fed and ECB coming as the economic data keeps disappointing.

    ReplyDelete
    Replies
    1. World of Finance3 July 2012 at 05:15

      I wrote about that last week. I think now 80% are bullish. ECB is expected to cut the rate and if they do it will help push the indexes for a day. And with S&P at 1365, no easing from the Fed. So yes, Friday would possibly be a good day to start laying the shorts.

      Delete
    2. Unknown3 July 2012 at 08:16

      Do you think they will do more besides just rate cut, QE in any forms? Reading the headline on CNBC, that's the reason they give for today's rally, "Stimulus Hopes Help European Shares Maintain Momentum".

      Delete
    3. World of Finance3 July 2012 at 08:56

      I don't think so. A rate cut tomorrow will help push SPX to 1380 on 5th. As I said before, higher it goes from here, better for shorting.

      Delete
    4. Unknown3 July 2012 at 10:06

      just have a feeling that when it drops it will begin with a big gap down, now patience vs chance of missing the move

      Delete
    5. alexnewbee3 July 2012 at 11:02

      CNBC is giving headline cos people always ask for explanations. the only reason stocks move - line of least resistance. may be they are killing shorts trapped 28th of june. may be they are inviting new bulls. may be just 401k money. but CNBC will never give you true reason.

      Delete
    6. World of Finance3 July 2012 at 11:06

      Ya I know that feeling. It is called " Fear of missing out". I would rather be sure that the up-momentum has stopped and not much gain can be had. Although I am targeting 1380,it is not something written in stone. Obama believes that "yes he can' and so does Bernanke. So it is always possible that we will overshoot 1380 and reach higher before the fall.
      My experience says, even if we have to give up initial few points up or down, patience always wins. After all we need to preserve capital 1st.

      Delete
  3. mis sold ppi3 July 2012 at 05:32

    So we will have to wait and see where it all reaches by Friday. I hope it goes up and reaches the level of 1380 in SPX which will be a safer place to take any position

    ReplyDelete
    Replies
    1. World of Finance3 July 2012 at 08:57

      I am not sure about the comment. Was it a question?

      Delete

Subscribe to: Post Comments (Atom)