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Wednesday, December 24, 2008

Long overdue update

I was in a routine of posting on my blog daily, but this past week has been a challenge.
I hope to ensure I get back to regular postings as my readers have expected.

On the top of my list is a level set of where my head is with the market.
Frankly, its anyone's guess which direction is next.

But I'm still a bull into Obama, why? Because Obama will announce changes, and the world doesn't want financial ruin, therefore his announcements will be spun as greatest thing since slice bread.
People WILL get their hopes up, the worst has passed.

Unfortunately for me, I once again bought a little too early for the next wave. The market has a habit of beating everyone back to the point of despair before changing direction. Most public spin has been "Santa Claus Rally", or "The Fed will save USA with ZIRP (Zero Interest Rate Policy)", or other spin. When my position aligned with mass media, I had a very bad feeling, and so far, I should have listened to my gut. When the mass media says up, we go down, when it says run for the hills, it goes up.

The market is in full "robbery" mode, that is, it will do exactly the opposite of the majority, so the minority can take from the majority. In a bull market, the majority and minority tend to align, in a bear market, its everyman for themselves.

In the future, I'll try to listen better to that inner compass that has done me so well in the past, and that is to not side with media figureheads like Jim Cramer. I don't listen to Jim, mainly so he doesn't pollute my mind with mis-direction. At the end of this post is a critique of Jim. There is plenty out there to be found, but this one is based upon the last two weeks.

In any event the last two weeks in December is all games being played. The trading is thin, many professional money managers are on vacation. Some people will "lock in" losses for tax purposes EOY, etc.

Best to stay out of the market, and buy USO as described in my previous post, add to the position slowly as it collapses. GDX has been a MONSTER, it refuses to fall below 29. I'm tempted to dump everything I have and go into GDX. Probably not a smart play, but there are gold rumblings in the media.

Russia and China have announced buying gold, as I expect other countries to eventually follow. So far, the amount of gold they are buying to "back" their governments is token amounts. It's just for spin in their country to try to give people confidence. But the amount of gold they are buying is nothing compared to their countries financial risk.

In any event, the market may go down for another week or so, and I wouldn't be surprised to see the DOW break 8,100, in an attempt to scare people into one last dump of their stock before it turns around for Obama. The positive spin people have expecting an Obama rally MUST be broken before it can turn around, just the rules of the game.

Long term, I still believe the US market will be screwed, and devalue (either lower market or inflation), until the US addresses the core issues as I previously posted. The Market Ticker Blog has an EXCELLENT rant on Quantitative Easing (borrowing cash) to pay for goods today, and effect on the economy.

Cramer 12/16-12/23 commentary

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