Wednesday, July 11, 2012

Pivot Point.

You may have already seen this work of art from Banzai and it possibly says everything that we need to know about all the leaders and various talking heads of Wall.St.

Was it a green or red day? While the major indexes are in red, SPY is showing a tiny green. It could have been worse and it will get worse. There were no magic words in the FOMC meeting and the reaction was that of a dejection and despair. I still do not understand who in their right mind is hoping for a QE or liquidity injection in every FOMC meeting. When the SPX is just about 5% below its high for the year and there is no riot in the streets yet. I mean in the streets of USA. But it is already burning in Spain. So the dreaded “A” word has reached the 4th biggest economy of Europe. Yesterday Italy also gave not so subtle hint that they world also ask for bailout in the near future and Finnish finance minister has said what was unthinkable even few months ago, that Finland is ready to leave Euro if push comes to shove. Things are getting interesting.

I think the markets will chop around for the rest of the week given that there is not much of data coming up but it is struggling to hold on at this present level. Only thing that is holding it up is the hope of a good earnings report. And it will be a sell the news kind of event. In my opinion any rip in the next two days will be an opportunity to add to the short position.

Today I added a short position on Crude but somehow the tweet did not go through.  If Crude remains at this level tomorrow, it will be a good opportunity to short.  So now the only thing left to do is: to wait. We are coming up to an extremely volatile period and possibly you can sense the uneasiness. But one word of caution, whatever you do, keep your stops in place. I do not know your risk tolerance level. So use your own discretion for setting stops.

Apple is very close to my short target and as and when it falls below $ 600, there will be lots to travel down. Apple earnings report is due on 17th and it sure going to be fun.

A dear reader had asked about Bonds. Both the 30 year and 10 year is on a buy signal now and will possibly continue till end of July or 1stweek of August, when bonds top and equities bottom.  But this is the final or end of the 30 year bull run of bonds and the next 30 years bear market in bonds are about to start from coming September. My assessment is based on fundamental and cycle analysis but famous chartist Peter L Brandt has a nice post on this subject which is here:

He lost money in the latest scam and is very much upset about all the day light robbing that goes on in our free capital market. And he rightly pointed out that every penny stolen from investors finds its way in JPM.  

So stay focused and play it safe. Thanks for reading . Please join me in Twitter (@BBFinanceblog) and do re-tweet, post it on wall and share with your friends and circle. I need more readers to stay motivated. Somehow, the readership of the blog has not grown to the level I expected. So need some stimulus from you guys to spread it around.