Late Night

It wasn't that long ago that I'd do one blog entry a day and feel like a champ. This is my 5th posting today, and I'd feel guilty if I didn't get it done. Anyhoo.........

I see that the Chinese stock markets are exploding higher again. The excuse this time is that the government - which seems passionately devoted to propping up its local stock market - dropped its "trading tax" by two-thirds. That sounds like a lot, but this tax went from 3 tenths of a percent to 1 tenth of a percent. In spite of what sounds like rounding error to me, that was cause for celebration in China.

I've noticed something else as well - - "calling the bottom" has become a passionate hobby these days. It seems like everyone is convinced that the grueling (10%), extremely long (weeks and weeks) bear market is finally at an end. I offer ABK as a symbol of the danger of bottom calling. At every one of the tinted zones shown below, one could have plausibly said, "prices have stabilized and things are settling down; time to buy!" And you can see what happened each time.

A deeper example of how badly people can get it wrong sometimes is Starbucks. This company, which dropped another 10% after hours today, has been falling for months. But go to Amazon and do a search for Starbucks, and you'll see a mountain of books that tell business people how they can emulate the Starbucks way to forge their own prosperity.

I won't bother showing the OIH graph for a millionth time; it has displaced IWM as my obsession these days. I will tip my hat at the reader who turned me on to DUG, the double-inverse fund. I put my entire IRA into this item, and it's up nicely over a just a couple of days. I could see 20-25% more over the coming weeks, possibly. I've drawn a tiny red line indicating my entry point.

My puts in ABX and $XAU are doing nicely. Gold is really starting to take a beating. I'd consider getting out when it gets down to that purple zone. Until then, I'm holding.

I have a kitchen in serious need of cleaning, and as a Felix Unger type, duty calls. Good night, and I'll see you in the ante meridian.