Tuesday, July 17, 2012

Getting Back To Business

I was awfully busy lately. So busy that I didn't have time to write, didn't even have time to seriously analyze my investments, which is even worse. Now I'm getting back.

There are several new trends around. First, and foremost, July looks better than I expected, so far. We had a huge sell-off last week, true, but it looks out of steam. Best of all, barrage of bad news doesn't seem to be able to crush market. And we had a lot of bad news. Libor scandal (it's much larger than anybody thinks), JPM (lesson to Jamie Dimon and all traders: never declare your losses until you close the trade), GDP and manufacturing trends (flatlined), unemployment (holding it's own). Let's add fiscal cliff here. I don't know if GOP has guts to ruin economy completely by refusing to talk about anything but complete surrender from Dems. Experience tells me that they should stop at the last moment. In any case, I'd rather returned Bush tax cuts than doing austerity (just ask Eurozone how much good it does).

But anyway, market holds. Trend, started in June, is not broken. This week is very important. We are getting a lot of earning reports. The earnings themselves are not as important as market reaction to them. Another trend: Treasuries are on the way to my forecast: 1% for 10-year note by Jan 1, 2013. Is there a way to profit from it? Sure, sell puts on TLT or calls on TBT. I'm not doing it, risk is too high, reward is too low.

Last couple of months the only money I made came from trading ranges in muni CEFs. Well, I'm going to continue this range trading.

Last, but not least: gold is broken. And broken hard. It's well below 200-day MA, barely able to stick to 50-day MA. Watch $150 line in GLD, that's the last line of defense.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I have long positions in several Muni CEFs.

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