Chicago number led to that little dip to 1348.5 and back up, yesterday the talks where traders meet was that if inflation is rearing its ugly head and economy is slowing what is going to happen to corporate profits. In my motes to this thread I referred to that, now as NAPM came out and it was slightly higher than expected the grief of 'infaltion within slowing economy' disappeared, the dip came in a quick one within 2 minutes atest of 1348 and back to 1353 although treasury traded down to 6.12 and change.. now we have these S&P earnings going stronger we have these core stocks not breaking and we have NDX not ready to go down, NDX has led the market here and it has to break for that big one.. The otehr worry about $, if inflation is in offing why is $ selling, purely because it is believed that a lot of money would be shifted as 'continental rotation' of money takes place, $ right now is being hurt by asset deflation worries and not on fudamental. In my opinion no market is big enough to absorb the kind of money loking for safe home. US stocks and top notch companies will and have stayed in the forefront of the economic cycle. Profitability will increase and not decrease, the sellers of real stock are not around, global economic revival will be a bonaanza for the US economy and the leading comapnies would benfit from it, the French numbers of production, German IFO and Japanese numbers all in last week pointed out a trend that is regaining strength of global economies. That is good sign and not bad omen, inflation from lows of falling prices it would send a wrong signal as if we are seeing rising prices that would certainly imapct the market and like yesterday cooler and saner heads prevail as you se today in future also, these numbers and strong economic results will flow in, very slowly the marekts are going to realize that productivity gains shall out pace wage inflation. CRB index still sits at all time lower band, those who are confused with all this dats need to see 1986-90 era and Jimmy carter days of 'malaise'. In this new economy the responses would be extreme, the best thing is that take these guys to cleaners day in day out. This is what I have done fro last 5 years and intend to do. The guys who are buying puts on MU were buying puts on MU at 25$ and was selling SOX at 180 just last Oct 98. they never ever loose, they told all of us that 9500 DOW is the long term top and we saw 11400 just 2000 points higher, they never got it right than, they will neither get it now.
The best way to protect your portfolio is buy out of money options on SPU and sit tight, one of these days like yesterday get out of them. This market is going to be range bound in next few months we will see the lower range of 1280 and higher range of 1418 being tested. Today we will see 1362 to 1345, only a break of 2274 on NDX will let me short the SPU options I will go long the 1320 puts... |
