Bernake Bites Back

So far this has been a pretty good day, but the longer DBA trades below 42, the more inclined I am to get out of the trade. Ultra Shorts SKF, SRS and TWM are working very nicely today, up ~3%. FXY and FXF continue to trade higher as there are more carry trades unwinding. Of course, SLV, GLD and OIL are trading higher, these babies are hot like Jonbenet Ramsey. GDX has been trading nicely as well. EEB is trading down quite a bit, but remains technically strong. If fears of global recession take hold, this could revisit January lows.
On another note, I'm loving Ben Bernake right now. Too many blogs shit on his head, and he seems to have a pretty good grasp of the problems at hand, and even recognizes the limitations of his policy. A senator, who may have been the illustrious Chuck Schumer, suggested delaying mark-to-market actions; Ben scoffed - way to go Ben! With lower interest rates on the horizon, inflation and diminishing credit market liquidity will bring tons of fish for the fishermen in the gold stream... heh. Mmm, it's hard to remember a lot of the testimony, so fucking smoky in this room.

Mindless

Hooray for cheap money
It sucks to be poor
Inflation is here
You may have to whore

Commodities and Chinks

Well its been two weeks since I last posted, but with a fresh bag of salad, I'm read to roll. It looks like the dollar is about to fall off a cliff as it trades to an all time low against the Euro. Oil, Silver, Gold, Wheat and related countries continue to move higher as global demand is spurred by the weakening dollar. If the SPY can get above 1400, it will be a major win for the bulls, but the real confirmation will come from China. If Chinese stocks fail to move higher, this rally will fail. Brazil has picked up strength, but global growth is dependent upon Chinese consumption. The two stories keeping the market moving is bank failure and commodity inflation, and it is prudent to remain market neutral. Interest rate cuts may continue to buoy the SPY's nominal price, but traded in silver, the tale is much more gloomy. In 2000, 1 share of SPY (SP500) was equal to 3 shares of SLV (Silver). Today, that very same share of SPY can only buy .8 shares of SLV; the SP500 has lost 70% of its value relative to silver in the last 8 years, and there is no sign of the trend ending. On the other hand, Silver will fall when fear of a banking crisis grips traders imaginations, and thus a short position in banks (SKF) would be a prudent hedge against deflationary pressures and the fear of global recession. Careful w/ leveraged short, wait for the market to confirm weakness (trading above relavent moving averages on multiple time frames) before you pounce. Agriculture has been incredibly strong, and DBA has been my favorite trade along w/ SLV; I'm still trading this north as long as it pulls the moving averages up on all time frames. I have been disappointed by Malaysia (EWM), which has failed to outperform, but the strength in Brazil (EWZ) is fantastic. BRIC funds like EEB are stabilizing nicely, and are providing very nice low risk entry points. But until China (FXI) can retake the 50 day moving average, I don't think this market has enough legs, even with a loose monetary policy.

Rally Ramblings

Thank god I don't take my own advice too seriously during the trading day, TWM is down a hefty 5% in two days. As the market rallies, I'm not playing the short side, I don't want to fight a rising 5 day moving average. EWM has been a solid performer over the last two days, and though commodities and precious metals sold off ~2%, they're technically in good shape. I'm still long SLV, and I opened a position in DBA and DBC. I haven't touched FXY yet, though once it finds some strength, I think I'll be picking some up. Solar stocks might be showing life again, as are miners and energy in general. Let's see if the SPY has enough legs to get above 1400, otherwise we can enjoy the ride down to the January lows.

Tuesday Morning

Insomnia has my balls again, so here are some thoughts for Tuesday. I like the action in the following ETF's: DBA, DBC, EWM, FXY, SKF, SLV, and TWM. These seven funds have many of the fundamental and technical characteristics I think will do well in the coming months, and have been looking real good in the past few days. Agriculture recently made new highs on record wheat prices. Commodities in general have held up rather well in the recent market turmoil, Oil seems to have found support, and the precious metals are either near 52 week highs, or breaking to new ones. Of all the foreign markets I track, Malaysia has the most technical strength, and coincidently, PBS did a special on it this evening. The Yen continues to rise as Japanese investors realize how little they know about their debt exposure, and the financials continue to suffer from massive writedowns. Credit Suisse reported a 72% drop in earnings... Silver has been outperforming gold lately, and a friend of mine in the business suggested that this may be due to a cyclical lack of supply from too few mines. Finally, though the small caps have had a violent rally in the past few weeks, if the markets continue to have trouble, I suspect you will see them resume their overall underperformance. FXI continues to look bounceable and bottomish, and USO might be making a break for new highs. I'm keeping a keen eye on XHB and XLF because if there is further weakeness in homebuilders and finance, it means sentiment has really sourered, and we should expect new lows.

Back from the Dead

It has been a rather ridiculous two weeks. This blog hasn't seen too many posts, mostly due to my horrific embarassment and reluctance to get back in the game. SRS, SKF etc took HUGE plunges following my recommendations... and while I had the good sense to steer clear of the mess (after losing 2% of my capital), I feel like an idiot. The rebound seems to have abated, and the market conditions that I like have returned. Gold has continued to outperform the Dow, and Real Estate/Finance has started to continue lower. The only thing that seems amiss is overall strength of the dollar, which I expected to go lower after the Fed's 1.25% rate cut. I've slowly gotten back into shorting the market, and accumulating silver, but I'm also keeping my eye on FXI and EEB for some long term bottoming action. Commercial real estate is starting to make the news, as is credit card debt... I'm pretty certain that these will be the next bombshells to rock the credit markets, but only time will tell. So far there has been some solid safety in bonds, but I'm expecting that to change once inflation starts to become obvious in the CPI. It's fucking 5:30 am... I've got insomnia...