I got nailed on my put options, and took a pretty good hit on my paper profits. However, my stops didn’t get hit and I’m still short. With this big up day in the market, Countrywide(CFC) only went up $0.33 which clearly put in the dog house as far as i’m concerned. I’m intrigued by the sell off in oil today. Oil took a big hit, and is shaking out the weak longs. There’s a lot of guys who bought at $96 and thought they’d pull out an easy $4.00/bbl after it crossed the buck. I envision a lot more pain before oil finally makes it’s move…..one way or the other.
The dollar is still on my radar. I might buy some in the next couple of weeks. With this 100% bearishness in the dollar, some kind of pop is to be expected.
I put on some huge seasonal grain spreads today. We’ll see how it goes. Grain spreads are low risk, low margin, and easy to manage. They can be rather profitable if one is right. I know a lot of people who make an excellent 7 figure income every year just playing the seasonal spreads. I don’t usually pull 7 figures out of the spreads, but my batting average is very high in those types of spreads.
Much to my chagrin, I’ve been looking at copper again. Copper is my nemesis, and every time I want to trade it, I have to physically stop myself from doing it. Copper owns me.
Jeff,
I think oil and gold are going to get killed here near-term. Even if the longer term trend is up, I can see an imminent blow-off just because of the speculative expectation. It’s been too easy for the longs, and nothing ever stays easy for very long. They’ll get nervous and trigger-happy to sell. The commercials and producers have got to be making a ton of money here, and this is a great opportunity to lock in windfall gains, and I doubt OPEC will be able to keep their members to their quotas at this kind of money.) Just a little bit of momentum to the downside and it will be free-fall through an avalanche of stops. Then the commercials will cover and life goes onward and upward again.
The other factor is (as you have pointed out) the US dollar - so bearish that it seems ripe to go on a rip the other way. (The Canadian dollar already pulled back a full 9% from its peak earlier this month).
Currently I’m actually in a gold short ETF, with the intent to eventually switch to the long one. I also want to own the ProShares leveraged long energy ETF (DIG), but before then I’d probably go into the short one for a while (DUG).
A break in energy prices and stocks would become bullish for other stocks (lower gas prices will help consumer sentiment and take the pressure off corporate profits that have a high energy cost component.) The market right now is looking for any reason it can to rally. That would do it. I think health and technology will have a good bounce in that scenario.
The monkey-wrench in the works could be the next Fed rate cut. The market will probably go up whether it’s 25 or 50 basis points. It won’t like standing still, and your shorts will buy you a lot of art if the Fed actually cuts. I think the Fed will do 25 (50 would kill the dollar), and the stock market (and gold at that point) will feed on it.
Hopefully Denise is feeling better.
Cheers,
George
Comment by allocator — November 28, 2007 @ 3:58 am
George:
You’re very astute. You obviously see a picture, whereas I can’t see the forest through the trees.
I’m a reactive trader by necessity, and am at a crossroads as to what’s happening. I know what’s happening, see it
happen, analyze it, and my mind still draws a blank. All I can do right now is carry spreads on the grains, and stay short CFC.
My lovely wife’s health issues are at the forefront of my thoughts, and have affected my rational thought process. For awhile I’ll
hunker down with a few positions, and wait for a trend I can understand…appears.
Jeff
Comment by masteroftheuniverse — November 28, 2007 @ 8:34 pm