Thesis is everything - with Obama spending like mad dry bulk shippers will once again be in need, coal production will ramp, steel will be in shortage, oil might make a race for $200 again... or so the stocks act like today.
Reality? None of the above, but this is not a market of reality. Perception is reality.
The government has saved us. Again.
While mocking it, we are willing participants in the Kool Aid. If the move lasts, all the lowest quality most beaten down stuff will make up the next leg of the rally - Obama solar stocks, small cap/mid cap Chinese stocks, and the "early cycle" plays of course (finance, housing, construction, retail) Nevermind the news, it will all be better in 4-6 months.
As I swig on Kool Aid an envision an America full of teeming shoppers emboldended by 4.5% mortgage rates for all, I am taking some of my Ultra Real Estate (URE) and Ultra Financial (UYG) off here as they are now both in the 6-6.5% range of the portfolio (12% total). While these 2 always seem to trade in concert I'm actually leaning more to the financial over real estate because the government won't be bailing out commercial real estate ... and it is a more direct victim of the flailing economy. So while I'm trading them in tandem only because the market is a monolith and we "student body" buy or sell everything, these two should separate at some point as the business bankrupcies reign down in first half 2009, while the United States of Banks meanwhile has the not so invisible hand permanently injected. It will be interesting to see when the fortunes of these 2 sectors separate.
China is no longer just poised for a breakout [China Just About Poised to Break Out] - it has. Pity the fool shorting China (source: Mr. T)
The seeds for the rally were there [Dec 3: Seeds for a Rally] and we laid out our near term upside targets [Nov 26: Let's Look at our Potential Upside] Party on.Long Ultra Financial, Real Estate in fund and personal account
2 comments:
Anyone getting into some shorts now? Huge run up and approaching the 50dma in the major indicies. On the other hand, if we continue on this uptrend we have sort of broken the downtrend by finally having a higher high (if you consider 11/28 a high)...when we do correct, what will be interesting is where we will bottom.
The government is here to save us, why would we short?
Resistance up at S&P 950, not here.
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