Friday, November 28, 2008


You can't turn on the television without seeing some talking head so happy about the confidence returning. They are saying that this is the classic situation where all bad news has been factored in and regardless of the news markets are going higher. They have been kicking my butt in the SDS that is for sure. When it seems too easy, it usually is, and the long trade looks too easy. Now I won't argue that maybe they will be right over the next couple of days, but I don't think this is going to be the massive rally that everyone is thinking.

I will say that the one thing that gives me concern is something Jim Rogers told me the last time that I spoke with him. I asked him how the markets could be going up (I was short at the time and it was working against me) he said that in an inflationary environment the stocks might go up, but you lose money in real terms if the value of your currency is getting slammed. If that scenario is beginning, then I could be wrong and we could see some huge upside. I don't think we are there yet, but I couldn't fail to mention it.

For a quick trade XTO energy looks good. It just jumped above its 10 week average and so I can stop out if it trades down below $35. Despite what happened today with UNG, I am still bullish on natural gas. Inventories declined more than expected today and UNG was trading up slightly in after-hours trading.

I worked the UTX short today and just decided to go ahead and stop out of that trade. I can't stand shorting a well run company that really has long term potential to bounce back, so I am canceling that call from last night as I stopped out of that trade at a small loss.

I did buy DE today and got out as the stock got weaker for a fair profit. I still like that trade and like DE over the long haul.

Next week is very important. If we don't rally hard on Monday and follow through on Tuesday all of this "perfect confidence" will quickly erode and we will test the October lows again rapidly. I think the government is going to hand some money to the automakers early next week and the market will appreciate that. Who doesn't like a good handout. Can you say SOCIALISM. The market will cheer the move in the short term even though the long term implications are awful. I am sticking with my energy theme and sitting around for more clarity. If this thing starts down again, I plan on getting short in a hurry. I will be on the road tomorrow, so there will be no Saturday post, but we will be back on Sunday with a more clear gameplan for the Monday trade.

Did you see oil today? It got hammered and then rebounded on the comment of an OPEC representative. We have been immune from geopolitical risk since the election. Is that honeymoon already over? I see oil much much higher from here.



Daniel said...
This comment has been removed by the author.
Daniel said...


i've been following your blog for a while now. keep up the good work!! i was trying to send you an email, unfortunately i didnt find it.

i've got a question concerning jim rogers. can you please shoot me an email, so i can send you my question. thanks in advance
take care
best regards,