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Tuesday, August 4, 2009

New Bull Market

Back on June 1st, 2009, I proclaimed the market was on track to hit SPX 1,000 or higher. Here we are 2 months later and it has finally come to pass. Problem is, I keep letting reality get in the way of trading the market, and I didn't believe it would come to pass.

The news is so bad, so horrible, that the fundamentals mean the market should trade much much lower. The GDP -1% on Friday was really -5.5%, for example. But the reality isn't the trade, its the lie. So today, of course, must be the top, since I started to finally reduce my risk.

The main issue right now is the USD, it is breaking down, and if it continues, the USD will hit new lows. Once that happens, it is possible for a free fall for the USD. The market will rally, as "cheap" dollar means the US is cheaper compared to the world. Also commodities will explode as the USD devalues. Problem is, so will Oil, ensuring companies that do not have in international presence to be under pressure by expenses. Of course a collapsing USD is horrible for US citizens, as their wealth compared to the world evaporates.

The question is, will this be allowed to happen? I am banking the US defends the dollar at some point, and the markets will retreat. But who knows besides Goldman Sachs and the Fed?

News such as SEC sues BOA over false statements on Merrill deal, FBI agents raid Colonial Bank (6th largest bank in US history to fail), Federal Tax revenues plummeting, Chrysler July sales fall 9%, GM buyout offers falls short of goal, layoffs loom, 3 Georgia banks get cease and desist orders, Wall Street reaps huge profits from easy money from Federal Reserve (and by extension, the taxpayer), Worldwide chip sales fell 20% year-over-year in the second quarter, is meaningless to the market direction. That is why I gave up reporting the real news, since it doesn't matter for market direction in the short term. In the long term, it means this rally is BS.

So , mantra is ignore the reality and watch the charts for now. As for my spin/advice: Each investor is on their own, I am holding my shorts, but lightening positions where possible, and adding to others. I have added to GMCR as a short, and added some October 70 FAZ calls at 0.80 each for some long shots. The higher this market goes, the harder it will fall, as we mirror the 1929-1930 crash.

From WebSurfinMurf's Financial Blog

From WebSurfinMurf's Financial Blog

From WebSurfinMurf's Financial Blog

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