Friday, December 16, 2011

Waiting For Santa

There are two questions (in no particular order) for the last two weeks of the year.

Are we going to have Santa Claus rally?

What is the window dressing trade for year end?

Santa was detected well beyond horizon in the end of November. Then he disappeared from the radar. Todd Harrison still thinks that reverse head and shoulders pattern in S&P is not broken, I'm not that sure. We'll see.

Window dressing looks strange. If I'm not mistaken, everybody is selling everything, with exception of muni bonds (I'm glad that I have a significant overall position in several muni CEFs). Another exception: very small number of Nasdaq large cap stocks (GOOG and ISRG in my portfolio). Can we profint from it? I don't know. The most obvious sell-off is in commodities, but swings there can be very big in a very short time and it's a dangerous game. And don't tell me to use tight stops: as they say in London Tube, mind the gaps. Gold behaves strangely. There was a headline on CNBC couple of days ago: "Gold drops 3 percent on Technicall Sell-Off, Euro Fears"". I thought it was a bad joke, looked for similar headlines in Google, there are dozens of them! Come on, people, gold should go up on fears, not down. I think we see a breakdown of the parabolic chart. Two months ago everybody was buying gold, now last fool owns it already. And some fools forced to sell on margin calls.

I'm sitting tight.

Full disclosure: At the moment of publication author had long positions in GOOG, ISRG and muni CEFs:  BTA, CEV, MZF, NMO.

PS. Events in Russia are developing fast, and accelerating. I don't know how they will end, one thing is clear: there will be changes. My heart is with people who went to the meetings in Moscow and other cities on Dec 10. There will be more meetings tomorrow, on 24th and later. The white ribbon below is the symbol of, I hope, new Russia.

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