July 8, 2015
The Stock Market is still a buy.
I still see 20,000 as a distinct target by year’s end.
I don’t think there is a talking head in America who hasn’t lately suddenly become an expert on Chinese equities. What a laugh…Nor are we lacking in yakheads who are fretting about Greece and predicting disaster for the European Union (and the Euro)…And…I think it is safe to say all of those same essentially worthless opinion makers will also tell you that our own stock market is facing dire peril, that the fact China’s stock market has fallen sharply (and according to all those nouveau experts is just getting started on the downside) and that Greece might be falling apart are both enormous negatives for our lives and markets here in the USA.
Hogwash. From the latest media angst and headlines you’d almost think that our stock market was already in the middle stages of a crash…when the simple truth is, we have been in nothing more than a normal sideways consolidation since December, but nevertheless, with the supposed Chinese and European “Crises” dominating the news, all of those forever wrong guys are still thinking the economy is in a precarious state and the last thing you’re going to get from the painted faces right now is, “Buy it!”. And I think that is exactly what you do here. YOU BUY THE MARKET.
I’m sure you’ve heard plenty of chatter about the market “breaking support levels”, or threatening this or that “moving average” but all I’ll say is take a look at my old standby chart below and tell me what you see that indicates “the market is in trouble”. For my money, all I see is a market that went sideways for 10-12 years and several years ago started pushing higher…right along with an expanding global economy…and more than likely, is going to do what it has been doing…and that is, chugging higher…As I said before, so far, this year, NOTHING HAS HAPPENED, but I THINK IT WILL AND I CONTINUE TO BELIEVE IT WILL BE SHARPLY HIGHER. Relative to how this market can move, there is a TON of time left in 2015.
I could probably inundate you with examples of explosive market moves but here are a couple I remember quite clearly…and both came at a time when sentiment was uniformly negative…when the market had “broken important support”…when NOBODY was thinking UP at all…And in both of these cases, the market DID just take off…There was no particular news item. No nothing to suggest the market was about to go…And it just did.
This one I remember as it was the second option trade I ever made…They LITERALLY were laughing at me when I called the trading pit to buy calls. I was told, “Buddy, you can buy all of these you want. Everybody in the pit will sell them to you”.
Don’t kid yourself. NOBODY PREDICTED EITHER OF THESE MOVES…Do I “know” something like this is going to happen? Obviously not. But I DO know it CAN happen as I have seen exactly this set up 100’s (maybe 1000’s) of times in this market and others…What do you hear out there from all those idiots on TV and the internet? Do you hear anybody fairly screaming, “BUY!”, or do you hear something that is VERY much quite the opposite? And as I am repeatedly reminding you: How often are those internet and TV guys right? All they EVER do is jump on the latest bandwagon and latest hot story…AFTER THE FACT.
Still looking for an upside EXPLOSION
In the Eurocurrency
According to all the FOREVER trumpeted conventional “wisdom”, a Greek bankruptcy was supposed to push Europe and the Euro into some bottomless death spiral…and concurrent with this supposed “logic”, we have seen speculative traders get more short the Euro than any time in history…And now that a Grecian collapse has essentially become a reality, there are still boatloads (oceanliner sized) of specs sitting there on massive short Euro positions and wondering why the Euro is not going in the tank…why all that “easy” money they envisioned is going the wrong way…when the truth is, THE EURO ACTUALLY BOTTOMED ALMOST 4 MONTHS AGO…That’s my opinion anyway.
I see this market as a coiled spring ready to take off on the upside…and blow all those shorts off the map…For sure, I may have this wrong but for all those shorts to make money, I’d say they IMMEDIATELY need some NEW news that is FAR WORSE than Grexit to spur any new selling in the Euro…that this whole Grecian drama has been played fully to the hilt, that it has LONG AGO been totally assimilated by the markets…and that the next thing we’ll see is a semi-euphoric lift off in Europe and its currency…As I’ve written before, I see all these people predicting the demise of the West’s oldest civilization as having their heads stuck up where the sun don’t shine, and that they are ignoring the fact this CONTINENT has survived being the battleground for two world wars AND a 50 year Red Menace/Iron Curtain…and whether or not Greece falls in the Mediterranean is essentially irrelevant…It doesn’t matter what happens there. The country will continue to exist, whether in or out of the EU…AND ALL THE NEWS ABOUT GREECE WILL SOON BE OLD, OLD, OLD NEWS…The markets won’t care…and I say the markets already DON’T care.
Buy the Euro now. I truly believe there is monster leverage here…and I do believe the fireworks could begin…or have begun…ANY DAY NOW.
I CONTINUE TO LOOK FOR THE EURO IN THE MID 120’S.
I will more extensively cover the other positions we hold within the next few days…Here are some very brief comments on each…
We are still long Corn, Cotton, Soybeans and Wheat…All four appear to be on the move…and even though all four look to be in the BEGINNING stages of bull moves, I still see tons of doubt across the board among agricultural analysts…I know they are out there but I am still not seeing anyone say, “Get on this horse”. To the contrary, it seems that the analytic masses are simply acknowledging that they have been totally surprised by the bull moves…but they are all still stuck on SELL…I CONTINUE TO THINK ALL FOUR OF THESE MARKETS ARE A BUY…STILL…
I CONTINUE TO THINK SHORT CATTLE IS A MONSTER TRADE (AND HAS GREAT 1 & 1 NUMBERS).
And I swear, there were probably not more than two cattlemen in the entire United States who were expecting the increase in feed costs that have been, and will be, generated by the upswing in grain prices. NOBODY IN THE INDUSTRY WAS EXPECTING IT…And everybody who owns Feeders are most likely already losing money…And I believe it’s only going to get worse…I CONTINUE TO EXPECT AN OUTRIGHT DEBACLE IN CATTLE PRICES. I THINK WE ARE NOT FAR FROM THE DAY WHEN THERE WILL BE VIRTUALLY NO BIDS---AT ALL---FOR FEEDERS…AND I STILL THINK WE ARE HEADED FOR THE 160 AREA…AND I THINK IT WILL BE SO FAST AS TO MAKE YOUR HEAD SWIM.
Give me a call if anything interests you here…or just to say hello…As always, I absolutely enjoy talking to all of you and hearing what is going on in your worlds.
The author of this piece currently trades for his own account and has financial interest in the following derivative products mentioned within: Euro, Corn, Soybeans, Wheat, Cattle