|
Dec. 3, 2008
It's time, immediately I think, to
be bullish...
I keep reminding myself I don't know what is going to happen in
the markets...that all you can do in this stuff is make educated
guesses, define your risks (the most important thing there is in
trading), put your money on the table and see what happens...and
never, ever fall in love with your opinion.
I have concluded tonight that too many positives have
now taken place in the world markets to continue assuming
everything is going to keep heading south. For some months now,
we have been lucky enough to be on the short side of a number of
commodities but I now believe it is time to take most of those
positions off the table...which is what I intend to be doing
tomorrow.
I suspect the stock market has finally reached a level of
despair that now argues for some sort of decent and potentially
long lasting rally...And if this is correct (I don't know if it
is), I would think a number of commodities that have been
crushed right along with stocks may also begin to stage some
sort of upside reversals...So, for better or worse, I think it
now makes sense to generally book profits on short commodity
positions and stand aside...I don't know if I am just being
nervous after having been right for quite some time, but I have
to go with my instincts...This may be one of those occasions
where three days from now I am asking myself, "What were you
worried about?", and end up right back on the short side, but
for now, I just want to be out...and taking a look at a few
markets as a buyer.
What makes me think the markets are ready to reverse?
1. Crude oil has now dropped $100 a barrel. THIS IS A
BIG DEAL. While this may be indicative of lousy
demand and a dramatically slowing world economy, there is no
question the new price of oil and energy products will be a
major boon to everything economic as we go forward from here.
2. Interest rates have dropped SHARPLY, with the 30
Year Treasury Bond dropping an incredible 1 1/4% just in the
last month, which resulted in a 20 point rally at
the same time in Treasury Bond futures.
3, Not to mention, while these two VERY MAJOR events have been
taking place, the US Dollar, regarded as trash just
four months ago, has rallied some 20%.
Going through the charts of the 30 stocks that make
up the Dow, my objective impression is that a heavy majority of
them have begun to look like they put in potential upside
reversals during the last few weeks. I certainly
don't know if these "looks" will hold, but considering how
dismal opinion of the stock market seems to be, I was really
quite surprised to see how potentially positive many of these
stocks looked...
Let's face it...The monstrous stimuli being advanced by the Fed,
the Treasury, and Congress WILL produce results...And the fact
that energy prices and interest rates have both undergone such
massive declines are both MAJOR positives for consumers and the
economy...Again, as always, none of these developments has been
at all anticipated by any analyst out there...nor by the
markets...but I think that could be about to change in a big
way...
I don't know if tomorrow we will be totally exiting our
short cattle and short soybean positions but that is what I am
planning as I sit here...
More to come in a few days...
I'd love to hear all of your thoughts on this...
Thanks,
Bill
866-578-1001
770-425-7241
|
|