I have kept quiet for well over a week watching the threat of explosive upside frenzy boil and boil, listening to practically every very respected primary advisor I am in touch with suggest this explosive upside rally is very much possibly imminent..oh I love the wording. From 60 year cycles to "this is the inflationary response" which even I have said, to sneaky slow bull markets, the markets are only going up driven by obvious sovereign level strategy that the stock markets will indeed be the root of the recovery. As of today, gold, oil, silver, commodities (ags have lagged) are now setup for an explosive cycle rally up, even the FXI blasted up past strong res at 42...oh, I'm feeling feverish as I write this, my blood is boiling. I can feel the rush, the greed, the fear of missing the move, the magic of watching my longs go up and up and up....oh yes, the government and banks working together to manipulate the markets up and up and up, how I love them, ahh, why was I worried? The world is finally a safe place again.
...Oh the happiness and goodness in the world's economies that will come with $90 oil makes me giddy.
...Oh the continued staggering unemployment numbers create a relaxed lifestyle for many, the very best of positive thinking philosophy.
The More Realistic Side of the Story
Veteran investment guy John Thomas recently interviewed veteran Charles Nenner over at Madhedgefundtrader.com. Nenner had spent 12 years with GS and states that his cycle work has never been wrong; he says all of the above items mentioned (stocks, gold, oil) have peaked currently and after a few more months, bond yields rising to heaven and all else going to hell. There are a few other advisors out there also in agreement that we're at best going sideways from here and may even have some nasty corrections and swings back down...that's right, no oh my gosh explosive rally is imminent. Now I have a headache.
...I would tend to side with Nenner and that's exactly why I'm looking at this broad cacophonous choir of "we could now have an explosive inflationary rally" and thinking to go meet Walden in the woods for awhile with my Yamaha electric piano to work on Oscar Peterson's techniques.
So then here is the secret for shorter term and swing traders - it doesn't matter if you're wrong or right, to be wrong 50% of the time is true mastery if you get out quick when it is wrong and let it ride moving up your stops when the trade is right.
For long term investors, you're money is safe in cash and that cash should be almost anything but the Euro and Yen. USD is the cash of choice today. Australian or Canadian dollars would be good choices too because they back healthy economies but if the USD starts climbing when bond yields start rising even more, you'll lose value there. If you can arrange it, you should have your cash in Chinese RMB. If you can get $80,000 or more into China, you should immediately go to any of China's secondary cities such as Suzhou and Shenyang where you can still buy new apartments for 6000-9000rnb per square meter. Those will never be bad investments and could for example, be fabulous. In Shenyang, you can buy for 6-8000rmb per square meter within half a kilometer of the Olympic Stadium area, next to a Walmart and 12 months later, the new subway line is opening with a station within five minutes walk. How that could be a bad idea is a pretty limited conversation. Oh, keep another thing in mind, apt property carrying costs in China are very low; monthly management fee like $40 not $140 and no annual property taxes...add it up.
U.S. Stocks - Gold - Oil
Markets-wise, the only thing we can figure is the obvious; cheap money pumping the financial system, both in China and the U.S., with nowhere else to go, and for the moment it looks as though a potential steamroller is imminent in gold/oil/silver, with the street choosing to ignore the calamities just around the corner in rising bond yields and other debt/tightening and all the implications that goes with those little tidbits. In previous post, we've already made our case for the ridiculous and outrageous contrived rise in the price of crude oil, almost guaranteed to start causing economic pain soon; but the greedy rich bastards simply don't care about the bigger picture more than their own problems, oh that's human nature for all of us, let's not be "too" judgmental? Besides nasty unemployment and sovereign debt problems, another major U.S. mortgage related crisis is coming our way as enter the summer season.
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Disclosure: short via CZI