Dec 8, 2004

The Passion

I get the feeling lately that market participants are becoming more passionate about their positions. The last few years one difficulty I have had is that a two day move in either direction seems to swing the entire market to the same side of the trade. That seems to be changing here. I don't think it means so much for the ultimate direction of the market but it probably leaves more money on the table for the middleman.

That said, I would be very wary of stepping into the oil or metals sector here. There seems to be a lot of rolling rationalization going on about 50 yr trends due to the printing of dollars and the general availability of commodities. Even if the dips are opportunities it is better to let the market base out and begin to feel strong again. Some of the industrial commodity companies may still be good shorts in here. Take a look at the chart of IST as it is not down nearly as much as the XAU or OSX. It also feels like the current commodity selloff will morph into real fears about Chinese growth.

The dollar is getting a long overdue bounce. I hope somebody was able to participate in it. Do you think it will bounce high enough that people will doubt that the U.S. deficit guarantees a weaker dollar?

No comments:

Post a Comment