Back into the game- the trading account is getting activated and I even signed on to my CNBC-TV online today - miss the old markets - being without a real position since March 1st has been a true nightmare, but now its time to deliver on my blogs et al.
The best advice I seem to be getting from my true friends is to wait out most of 2009 and start trading in 2010.
The market is "killing" people with its randomness and I guess I can understand why when Obama sees todays repaying of TARP money as something "positive" and not for what it is: A financial market which is livid scared of the Socialist Administration who believes in intervention, higher taxes and destruction of private initiatives.
Often the most simplistic way to look at the market is to check on the "technical patterns" - here to my surprise I find myself starting to believe the 950/1050 top - may actually really be a 1050 top - the momemtum of the "dumb" money - i.e: the long only managers chasing their tails as their clients wants The Full Monty of risk allocation will wag the market higher through a quiet summer where no one really wants to deal with the crisis.
A while back, seems like a long time ago, I wrote about how markets tends to get "fatiques".. they simply start to move in different direction because its "time" to do so... I really believe in this concept - or in other words: The only unknown quantifiable parameter we continue to ignore is time and its impact on trading decisions.
Someone who takes time extremely seriously is Terry Landry - his T-theory became a household concept when Marty Schwartz mentioned T-theory in the first Market Wizard book.
I note how Terry recently is starting to look for a serious break-up - his target if I am not wrong is a mighty 1340 in the S&P ?
Check his website: http://www.ttheory.com/ and more specifically check his latest chart: http://ttheory.typepad.com/files/srt20090605.pdf
Terry is not a trader known for high frequency and I love his time dimension plus the logic of his concept.
Click on chart for bigger version
As seen from above chart - I start to believe that 1050 is a real possibility, and the early running of my model in Beta-world is clearly long and happy to be so (I will start the models next week)....
The concern obviously being the rising yield which is hurting and counteracting the dominant theme and action by Fed - reducing the GROSS PAYMENT done by consumers in everything from credit card to the main deal: mortgages.
Also threathing is the potential weaker US Dollar - I think we all have to agree that the weaker US Dollar is fact not a question, but the timing is extrmely difficult as the European Banks are still shaky and the turmoil in Latvia indicates more write-downs are not only needed but called for.
The banking sector in Scandinavia is extremely poor - I expect Swedish and Danish banks to be down-graded later this year- Is it becoming more and more clear to me that the modus operandi used in Scandinavia and probably else where is one of: "Hands off " and "No reason to rock the boat" - so we, the shareholders, have to live with results being announced which at best is fiction and at worst is science-fiction.
Yes, I am saying this: The regulation may "conceptually" be stronger, but everyone has a vested interest in "containing" and "buying some time" the true fact is that Socialism in its present form in the UK and in the US is making sure we will have a lost decade of lower growth, low productivity and increased spending on pension, health care through MUCH HIGHER TAXES.
I find it ironic that despite what can now only described as a MASSIVE rally in stocks and a cheerleading by Prez O only matched by Greenspan's stupidity in the 1980s, and 1990s (or was it 1880s?) the ACTUAL fundamental situation is not improving ...
I have talked to 100s of business people and NO ONE is seeing any improvement at all - if anything people are seeing a negative acceleration to the downside.
Point: Enjoy this party: The booze is cheap, the music outdated and the hang-over have no cure..!
For now I will venture into small long on the stock market - respecting the "dumb"- money ....data is improving according to plan, but market over-interpret all events economic as well as ad-hoc ones...
Higher yield is a summer thing - I will look to go long Fixed Income in July - not before - I like commodities - and I need to revisit my old REFLATION basket -which seems to be doing well recently.
US Dollar - still awaiting the trigger point - decision is now taken - execution is different story...
Beta model is 80 pc long stocks - 10 pct in FI (mainly Credit ETF's) and 10 pct long commodities
Alpha model is small long stocks, short US dollar, short FI, long Commodities, short CREDIT.
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