Friday, January 30, 2009

Not seeing much on the long side

Seeing Dow, S&P, Naz just above midline overbought. No compelling reason I can see to be long the indices this particular day. On a very short-term chart, S&P failed resistance at 875. You could make the case for being a bit short based on that, but I'm not playing indices today.

The thing that caught my eye this morning is gold. I see him quoted 921 as I write this. About 916 would be the right neckline of that squint-y H&S pattern. This would target to 1200.

The amazing thing is, this is happening in the context of a rising dollar. I think the dollar strength is an artifact of euro/GBP weakness and gold is acting as a reserve currency . CEO of Barrick talked about the possibility that China would divest its dollar holdings and convert to physical gold. Rumors of a bank holiday in Britain. Rumblings about problems with physical delivery from Comex - the usual stuff that outsiders like me can never really pin down.

Scanning the groups, not seeing anything to excite me on the long side.

Where I sit right now: Over half cash, biggest position is still TBT, DGP, SRS, a little FXP left. DDM on the long side as a balance. Hard to characterize in terms of long/short exposure... perhaps a better way to put it is "long nominal rates and panic."

The last week or so has sure had a melt-downy feel to it, like something big could blow up any second and the world would change forever. This has been disconcerting to watch for a couple of years now.

1 comment:

Nate said...

You betcha it is dicey right now! That 1000 billion TARP is going to be a mess to try to predict how it reacts once it gets unwrapped. Market could rally 1000 points in a day or do the opposite if they nationalize the banks after all. Being long a few VIX calls sounds like something to think about right now to me.

All the bad GDP & unemployment numbers still yet to hit. Cash is a position is my favorite quote(and my largest position with over 70%).

Using the cash to go in & out of positions in a day timeframe after a trend develops & news gets out after open. Just hard to hold anything more than a day really now for me.

ERX held up today still even though it went down. My core position left is in ERX with hope that oil tracks gold in just lagging fashion. Calls sold against it too.