Monday, February 20, 2012

Ratings Agencies Ramifications

Well, let's wait and see what Moody's, S&P, and Fitch have to say about this "deal."

Deal or No Deal...No Deal?

No deal? Greeks kick themselves out of the euro?

Thursday, February 16, 2012

Monday, December 5, 2011

Short Opportunity Of A Lifetime?

Well, it's been two weeks since I gave the two-week notice for the bears to wait.  The rally of 7% in the markets last week went further than I expected above the 50-day moving average.  I think there was some leaking of information on Monday that contributed to the big moves on Monday and the public announcement on Wednesday of the coordinated central bank global dollar liquidity.

However, the S&P did not cross the 200-day moving average (1265) convincingly.  A failure to close above the 200-day signals that there's a strong possibility this is the opportunity that the bears have been looking for!  Last week and today were excellent opportunities to open shorts and buy puts of  >3 months.  As banks and other institutions hedge their bets of a failing euro and eurozone, the cascading dominoes of self-preservation will fall.

If by some miracle, we close convincingly above 1265, we may need to reevaluate.  But for now, this looks like the short opportunity of a lifetime.  Today, the S&P is rumored to put all euro zone countries on negative watch this evening.  And so it begins...  We'll have to see how the markets act this week up until the summit on Friday.  A failure to reach any meaningful agreements with adequate details could spark an ugly Monday next week.  Grab your popcorn.  It will be an interesting week.  Although the Dow closed up 78.41 to 12097.83, the VIX was up 1.16% to 27.84.

Friday, November 25, 2011

Europe Out of Control

Italian two-year bonds hit a record 7.82%!

Euro-debt problems getting out of control.  Greece looking for 75% haircuts.  Germany not backing eurobonds.  Spain 10-years were at 6.57% this week.  Disaster of German bund auctions (only 60% demand).  National pride issues starting to crop up as friction between European countries.  Belgium downgraded by S&P from AA+ to AA.  Dexia deal is in trouble and more banks could fail.  The eurozone is falling apart!

Bank recapitalizations sure to cause heavy selling into the first half of 2013.  I expect a further downward in the markets.  Along the way down, we make spike up to a lowered 50-day moving average.  Then. we have the big failure there to a crash of undeterminable proportions.  Clearly, the trend is down, though.

Monday, November 21, 2011

Super Uncertainty ^ 2

Well, looks like the next catalyst down might be the US Super Committee's failure to get a deal done.  Today, the Dow sold off over 340 points but then rallied to close down 249 to 11547.  There was a rumor from Max Baucus that the Super Committee still has a few hours before announcing that a deal is dead.  Not holding my breath, but you never know.  The S&P closed down 23 to 1193.   We have now closed below 1209 and await the Super Committee's results.  A break below S&P 1185 on Super Committee's news would be very negative.

Over the weekend, Spain voted a change in government.  Mariano Rajoy is now Spain's new PM.  With a 23% unemployment rate, this news doesn't change much of the reality of lack of growth to get out of debt.

There were also fatal clashes in Egypt.  The Egyptian cabinet resigned Monday night. 

Uncertainty x Uncertainty = Uncertainty ^2.  Not a good situation for investors.  One bit of "positive" news was that the VIX didn't rise that much today as one might expect (up 2.84% to 32.91), so we'll have to see if we break down from here there's a bit more upside before we crash.  A global sell-off, broad-based similar to today, will take down just about everything but cash and shorts.  Stocks can fall much faster than they rise, so there could be an excellent opportunity to make some money here if you're short or want to average in on the way down.

Friday, November 18, 2011

Bears - Give It a Couple Of Weeks

Another light volume day.  Not much movement or much news.  Europe holding off news before Spanish elections this weekend.  Dow closed up 26 to 11796.23 S&P closed virtually flat at 1215.72.

Looking for a close below 1209 on the S&P to see conviction in the selling.   I give this market two weeks to start to crumble in a cascading manner.

Italian banks may need another $8.2 billion in capital.

Super Committee results next week.  Spanish elections over the weekend.  ECB ruled out as lender of last resort.  IMF previously ruled out as lender of last resort.

France's AAA rating potentially downgraded soon.

Have a great weekend!