Monday, June 1, 2009

Hitting the Ceiling?

Here we are. The day we knew would come eventually and the day many have said the S&P was magnetized to. We will hit the 200 day MA today on the S&P. Theoretically, and the odds are that it will bounce off this number at least the first time since a 200 day MA is a strong resistance especially when it has been below the 200 dma for so long.

But the VIX remains solidly below it's 20 dma which would indicate the market is still not ready for a real correction.

So, we stay in a trading market where longs have to take profits on moves up and shorts have to take profits on moves down and I will continue to do this until the VIX breaks its 20 dma.

I have really moved mostly out of the U.S. equities and focused on energy, nat. gas, gold, china, and emerging markets. I exited my TBT positions early last week and looking to re-enter those this week at 52 or even lower.

Financials continue to be way to volatile and a completely unknown commodity. Some experts say the banks will have record earnings, others say the toxic assets (that no one is talking about) will eat them from within.

Long term, the market will have a huge correction and I still believe it will be this summer, starting in June. Unless you believe markets go straight up with unemployment at record levels, you can't bet on the markets continuing their march.


  1. Do you think the PPT will allow a correction in June?

    Regarding the financials I don't have a clue what the toxic assets will do to the 2nd quarter earnings, but I think that one of the reasons they posted a profit was due to the fact that they could by their own debt cheaper and post that as a profit. Now that the fear is long gone that debt should be more expensive, but this is just a guess.

  2. Careful w/TBT on Wed - Bernanke is giving a

  3. Mike, no one has a clue on what the true financial earnings will be because they are not taking into account any toxic assets. What we do know is since toxic assets have now been set aside, banks have the go ahead to report earnings based on operating revenues, and not on write-downs. So banks should all have steller earnings this quarter.

    At some point in the future, the banks have to get these toxic assets off of their books and then the write-downs come. But until the economy gets on its feet, the fed and treasury will protect the image of the banks and they will do this by diluting the dollar and risking hyper-inflation which is why you need to be in energy, commodities and metals. And short treasuries. All are protection against what the machine is doing. Playing SKF, FAS, FAZ, UYG are doomed to failure.

  4. In Debt, not worried about Ben. He can say what he wants but the printing of money will not help treasuries in any way anytime soon. TBT is already a nice play today although I only bought a tiny bit this morning expecting to buy more but not at this price. Will wait for 52 to buy anymore. I want a bargain and I believe the Fed will create enough PPT to give me a bargain.