Gold/XAU index was up nearly 5% !!! - ?
...Price of Gold up nicely - go figure (VBG).
The inflation glass is either half full, or half empty - depending on which side of the street you are on .... commodities near record highs, employment & wage pressure still very strong, wealth effect - appears about ready to run unabated once again ... $30 Oil, $4 NG & $2 gasoline potentially at the pump, strong global growth - you tell me we have no signs of inflation ?
The NAZ being able to hold, or more importantly to rally; from these levels is NOT based upon the wicked witch of inflation being dead... but; rather it is based on low volume short covering and some momenteum players pushing the market; the problem remains valuation multiples - period.
We are within a single Fed Meeting of a double digit prime and 6 - soon possibly to be 7 straight rate hikes - is the value of earnings now once again - worth the same multiple in this much higher rate environment - as what it "WAS" in that former - much lower rate environment ?
You can not simultaneously have a decade high prime rate and decade high market multiple valuations = TILT !!!!!
A rising, or a higher rate environment directly impacts the value of both present & future earnings. The NAZ can NOT maintain these multiples in this rate environment - period.
If I am wrong - so be it... I got the "easy" NAZ money in the orignal April to first of May bounce/rallies, got some short profits and caught part of this final move on the remaining 50% tech position (albeit only about 15% of my total holdings). I'll glady take this % return on the NAZ here for a YTD return if I miss the rest of the entire move... I'll pass for now in this rate/inflation environment at NAZ 3700 +
The volume betrays something is wrong with this rally.
Short covering, last gasp's by daytraders, some technical/momenteum traders - getting in on the last "tradeable" move ?
...we shall see.
Nat Gas imho went a bit into the speculative area over $3.65ish here imho - hard to maintain that level here - I've been waiting for a correction similar to this past September - to re-leverage into; untill then holding ONLY value in the Nat Gas stocks. The time to have taken profits via selling in waves into the move of late is passing, some of the rotation idea's like THX back at $18-$20, or $12-14 BSNX no longer exist. Also; many OSX components like ESV are getting into the no-brainer territory once again; I'll be loading up ESV the second & on the tic as it breaks sub $30.
I allmost hope the NAZ runs thru 4200 ish here - drawing the momenteum money out of the OSX - so I can re-leverage the dip off of the OPEC production increases; as the drillers especially are seeing dayrates ramp.
I'm trading a couple of telecom's - sold all my other long tech - now cash and I have the single highest cash position since the first 10 minutes of the day I originally signed onto to my first online brokerage account (VBG) !?!?
This market is very , very "hinkey"... a bit of skepticism, with a dash of paranoia, doubt and some fear/respect for market history and most importantly patience; will go a long way in making big money in this market.
We just may get one hell of a nice OSX buying opp in individual stocks here shortly - re-weighting back to GOM leveraged offshore drillers & some service co's vs. E&P's in general on any significant pullback here.... I'll still probably not go more than 75% invested on any Oilpatch pullback here into the FED/OPEC meeting - preferring to wait for a potential re-visitation of yet another NAZ & overall market selloff - I think there is another one - to new lows yet in the cards.
$29 ESV & $20ish FLC if seen - will be Xmas in June....got to keep some serious cash & buying power on hand for those potentialities.
As GWB would say:
To do otherwise - just wouldn't be prudent...
I hope many here were selling into these rallies of late - taking profits & raising cash/buying power - we are about to get some really nice buying opps post the June Fed & Opec meetings & a great amount of market risk will be quantified - either reduced, or will be known. This also coincides with the upcoming Q2 earnings period in which the GOM drillers will probably show, if not comment on the ramping of GOM dayrates & the E&P's will print some serious cash... interesting to see how many hedged into these heady nat gas prices . |
