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.