Passing Thoughts

By -

Greetings from the Stanford Dive Center.

I'm feeling comfortable with the market now (an unusual phenomenon for me, to be sure). I think this comes from being fresh on the heels of a profitable April and having a nice "blend" of long and short stocks (40% long, 60% short, and overall, about 75% committed with the rest in cash). I therefore don't need to pray to the kitchen god for the market to collapse the next day. I have a shot at making money no matter what the market does. (Oh, errr, and I am not long GMCR, which tomorrow should pretty much be reason enough to declare it a good day).

Anyway, I have no large positions of any kind, nor do I have any options in my personal account (which is up 30% over the past couple of weeks, so I'm playing it safe for the moment). There is a big announcement coming out from the ECB at 7:45 EST on Thursday, and if anyone cares what I'm hoping for, I'd love to see a push up to 1.32 at which time I'd short it like mad again. If it plunges, well, I'm going to be mightily peeved, because I'm bearish on the Euro in general, but I didn't feel this was a good price at which to short.

As I've said countless times, 1.30 is the key. If we can break 1.30, all holy hell will break lose. See, I don't particularly enjoy having a balanced portfolio, because if the market moves strong in a given direction, the longs and shorts just kind of cancel each other out (particularly as highly-correlated as the market is, Green Mountain notwithstanding). My longs right now are really to accomodate the fact that I don't feel it's safe to be balls-to-the-wall bearish at this particular moment. A break of 1.30 would permit wild-eyed behavior.


Another thing holding me back is the miners. I am fighting every instrinct in my being and being bullish on miners. I am long several individual issues and am long GDX as well. Getting a push up to the dotted line below would be all that I ask. I'd take profits and short GDX like a Banshee, assuming Banshee do that kind of thing.


As for the ES, we remain safely beneath the broken wedge, and the support at 1352 is far, far away. The big report, of course, is Friday morning's job fabrication from the government, and even if God told me right now precisely what the report would be, I'd have no idea what to do with it. What if it's "good" news (huge quantity of jobs added). Well, that puts the kabosh on QE3, doesn't it? And that's bearish, right? But it shows real economic strength (if you choose to believe the BLS), and that's bullish, right? What to do, what to do? Just look at the reaction to the strong ISM report earlier this week to get a sense as to how disconnected markets can become.


Anyway, I'd love to be 100% short, but I'd love to make money even more, so I'm staying diversified at this time. Let's see what the ECB announcement does to shake things up. Like I said earlier, a push to 1.32 would give me the all-clear to short it again.

Good night, and thanks for being a supporter of the blog.