SeeTheLight

Wednesday Outlook: Commodities, Global Markets

Seems like Turbo Timmy and Helicopter Ben are ok with the US Dollar being the sacrificial lamb. I just wonder how long all the US creditors will keep buying treasuries with a minuscule yield and a declining dollar. Hard to keep the stimulus pumping if no one wants your debt, which leaves only monetizing as an option and the systemic risk that represents. But hey, retail sales were up 0.2% so everything is good.

I am starting to reconsider my UUP position, but in the light of the fact that my Gold/Silver is offsetting it I will hold for now. I look at Dave's charts and see 76 on the USD as a line in the sand. That breaks and we are off to the inflation/devaluation races.

Good Luck all.

Thursday Outlook: Commodities, Global Markets

Shanghai is up almost 5% on better than expected lending news; US market futures are green. Looks like Tuesday may have been another dip to buy. Let's see if the bulls are able to grab the reins and drive the markets higher.

Personally I am still fearful (while others are greedy) and even if the market surpasses its most recent top I have no faith in it and continue to sit safely on the sidelines mostly in cash, a few longs, some Gold and Silver and some UUP, waiting to see if reality ever decides to set in.

I can say its difficult to remain disciplined with the casino mentality of the market today. I briefly flirted (in my mind) with jumping into the dash for trash. Thankfully I did not and saved myself some money, a lesson that didn't cost me anything and restored my discipline to be patient. Sooner or later the S&P P/Es will return to the mean (and somehow I doubt that will occur by the "E" actually increasing to reduce the high multiple). Until then I wait.

Good Luck all.

Wednesday Outlook: Commodities, Global Markets

Although there is a high inverse correlation between Gold and the USD (for the obvious reason that Gold is most commonly quoted in the dollar), if we see a significant pullback here you could see both rise in a "flight to safety" as the goldbugs go to their preferred bunker and the institutional investors search for safety by buying treasuries.

Personally I believe a pullback is inevitable, already China is turning down the stimulus spigot (in the form of credit tightening) and its only a matter of time before the US is forced to dial back its own largesse. Anyone that believes that the stimulus has been successful in jump starting the economy is likely blinding themselves to the fact that nothing really has been repaired, and once the punch bowl is removed the economic engine will likely sputter and died.

But the question is when. You mentioned that we are seeing a reversal in behavior as good news is being sold off. We are seeing another battle between the momentum bulls and the fundamentalist bears. The bulls could win another battle here, but the war will inevitably favor the bears in my opinion, since all this stimulus has accomplish is a redistribution of wealth, not any ongoing growth.

Personally I am being very careful in any equity longs I have remaining, with moderate positions in UUP and in CEF (Gold / Silver), which represent good risk/reward to me. The rest remains in cash in the expectation of a return to deflation or low inflation for the next 12-18 months. I'm also considering moving a bit into TLT but its risk / reward is less compelling to me than the other two.

Good Luck all

Thursday Outlook: Commodities, Global Markets

I've started to take profits on my longs that have skyrocketed, and I continue to hold on to any laggard longs with the belief that people will realize, hey, they've been left behind and that is unacceptable, everything must be overvalued, good, bad or ugly.

It amazes me that despite the ho hum news we continue to rally well above 200 MAs. I guess I could be leaving the icing on the table but I've already had my cake.

The big concern I have is that no one is talking about Back to School nor Christmas yet. Back to School is going to be especially hard compares since the consumer really didn't get hit by the recession until 4Q. If that impossible situation can be spun positively, well, then we will truly be living on Fantasy Island.

You add in the fact that oil is back over 70, commodity prices are skyrocketing - that is taking more money out of the consumers pocketbooks. The market can remain irrational longer than one can remain solvent but euphoric panic buying, short capitulation and even GS's HFT can not buoy this rally indefinitely. The NYSE McClellan Index and NYSE Summation Index charts are especially telling.

Good Luck all