Wild Week

I've been so overly medicated these past few days I haven't had the patience to write more than two sentences. All I can do is come up with half-brained t-shirt ideas like "Liquidity Crisis" underneath an empty beer mug. I'm smoking more of everything and doing less of anything, and damn it feels good to watch Weeds all day. Why so utterly sloth like you wonder? Banks are marching higher, gold is falling lower, and the dollar isn't falling through the floor. Home builders and retailers are appearing to make bottoms, while oil continues to fall from its breathtaking highs. Taiwan is on fire as a new President is ushered in, and the BRIC countries seem to be showing some signs of life. The yen and franc are slowly slipping, but remain well within a multi-month uptrend. With the markets "flooded" with liquidity, stocks are on the rise and fear is being washed away. The talk now is the talk of the last 6 months... Have we hit bottom?
FUCK NO (I Think)
This countertrend rally happened in January, it will happen for months to come, but it is not to be believed (yet). Gold (GLD) will rise again, probably after bottoming somewhere in the mid 800's. Financials will fall 20% (XLF), and we will hear of another huge company totally failing a la Bear. I'm currently in a sloth like state because I don't need to go hunting. Thee market is coming to me, the higher it rises, the further it will fall. A correction in gold is long overdue, and though it may trend sideways for a month, it will provide a great buying opportunity and base for further upside growth. If this rally does manage to sustain itself, the key markets to follow are Taiwan (EWT) and the BRIC's especially Brazil (EWZ). So long as the dollar doesn't lose strength and can stay at parity with the Fran and 100:1 with the Yen, the market will not fall, but any sign of dollar weakness will likely encourage further unwinding of carry trades, and downward pressure on the markets.
A few weeks back I mentioned buying SMN (short basic materials) and UYG (long financials). This pair will lose its edge in the coming days, and will resume under performing once this counter trend diminishes and the sellers take control of the market.
Some of my favorite individual stocks have taken hefty corrections, IBKR, BPT, HTE, BPT, TELOZ. I'm not sure what the story is with IBKR, I'm not gonna touch it for now, but the rest are energy trust, with high yields and low P/E's. Once oil stabilizes, this will be a very safe place to park my money for some yummy 15% dividends.

The Dollar Collapse

Booooyaaaaahhhh! I think I'm gonna quit trading equities and move into Forex (just a thought)... Sometime last week I moved everything into Yen. This has turned out to be a nothing short of perfect as the dollar fell to new lows Sunday evening. I sold my Yen as it regained strength, but then quickly jumped into Francs the as the dollar lost a few percent in a couple of minutes. Now, I'm back into dollars, hoping for more dollar strength so I can buy yen/franc a lil cheaper. I think there has been a bit of a panic (quite rational), and that a near term bottom has formed for the dollar (till Tuesday). I'm pretty sure the equity markets will do the same... high volume sell off, and then a slow steady recovery throughout the day. I keeping a close eye on FXI, looking for some good old fashioned panic, and a nice entry in the low 120's. I'm sure gold and oil will be ballistic tomorrow, but energy and precious metals seem badly in need of a correction, so I'm not exactly jumping all in.

A Good Day To Wake Up Late

Having missed the market open by about an hour, I didn't have to do any guess work as to the markets direction. SMN (double short basic materials) is up 6.97%, UYG (double long financials) down 4.85%, which is roughly a 2% gain on a -1.5% day. Thus, the hedge trade worked, but there was no reason to go long the financials w/ the news on Bear Sterns. Oil still made a nice new high, but Silver had a sharp drop early in the morning, and at this pace, it could easily work its way bay to 17 dollars an ounce. Perhaps we're gonna get a nice correction in commodities as the bear eats everything.
Having said that, I'm pretty disappointed with the last few months of trading. I'm showing ~6% gain for the last 2 months of trading, which is a anemic 3% a month. That's just fine and dandy if you have $100,000 and don't mind living on a shoe string, but I'm not even half way there. On a brighter note, the SPY is down about 15% in the same period, so I don't want to give up trading because it seems to be working. By the same token, I could have put all of my money into gold in May of 06, and laugh all the way to the bank, no trading, no fucking around, just laughing... Come to think of it, my 6% gain barely covers the drop in the dollar against... EVERYTHING. Glad I went to Europe last summer, because trips overseas are getting more expensive by the day.