Tuesday, March 15, 2011

Buckle Up

In a bizarre twist of fate, I bought SPY puts yesterday, not to profit off of the Japan tragedy, but to hedge some long positions. Since some new subscribers are on board, SPY puts go up when the market goes down. At this time S&P futures are down a whopping 28 points. It's been a couple of years since we've seen this type of action.

My favorite longs, both gold and silver, are taking a beating. Yes they are safe haven plays, but in times of market liquidation, gold and silver will drop as hedges dump to make up for stock portfolio losses. When people need money they also sell everything in sight (for now).

Not even QE happy Wall Street can withstand the overnight 16% drubbing of the broad TOPIX index in Japan. I watched the Tokyo Electric Power (TEPCO) news conference live last night on NHK TV via web stream. It's interesting that Japanese utilities can be quite evasive with the press just as any utility would be here in the US. The Japanese Press Corp was quite demanding. It was refeshing to see reporters demanding answers (no softball questions). But the problem was that TEPCO gave no answers, so NHK cut away half way through saying they weren't getting any new information. Even the Jpanese Prime is in dark wondering aloung. "what the hell is going on".

Conventiional wisdom would say that a dead cat bounce is ahead. and perhaps that might happen in Japan tonight, but the Tokyo market will be under significan pressure until signs point to the nuclear disaster taking a turn for the better. As of this morning, reactor #4 is now at a boiling point and major troubles persist at reactors 1,2 and 3.

If you are good with a minute chart and know how to look at classic RSI today is a good day to play the extremes that we will see in RSI.

You can bet that names in the Uranium sector are going to get hit like Cameco.
Multinationals that do lots of business in Japan will get slammed, like GE, Aflac.
Nuclear Industry names like Babcock and Wilcox will get clobbered.

Not every stock will fall on Wall Street. The solar group is looking strong this morning. We could see some action in exchange group with names like NYX and CBOE catching bids on consolidation rumors.

Remember the adage: You're only as good as your information. I had a bad feeling about the market yesterday and dumped my Apple shares after it failed to rally on news that IPOD2 sales beat estimates by a mile. All day Jim Cramer said the media was overstating the Tokyo nuclear problem which made me all the more uneasy. What does Jim Cramer really know? Granted, I saw him often make a nice salad at the CNBC cafeteria salad bar, but what does he know about nuke energy??? Cameco was also complicit with its conference call statements that it saw no major effect ahead for its business. what?? News radio had too many know it all guests saying that this wouldn't Chernobyl level stuff, etc.

Continue to watch the middle East. Bahrain CDS is widening where they have declared martial law.. Ghadaffi is still running around..

FYI here are the NYSE circuit breakers... http://www.nyse.com/press/circuit_breakers.html

These opinions are today. Lert's hope there is better news tomorrow.


silver investing said...

However, as markets assessed the impact of a slowing world economy, higher inflation, higher oil prices and the massive earthquake in Japan, prices for gold and silver saw significant price improvement in late Friday New York trading. Gold moved up $9.20 to $1,421.30, while the silver price rose $.60 to $35.90.

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