Wheeeeeee!
That was some exciting stuff yesterday wasn’t it? The Dow gained 0.58% and the Nasdaq climbed another 0.44% – IN EUROS. As said at the top of yesterday’s post, the dollar’s move is the true story of the markets and what looks like a drop to you looks like a pop to our friends in Europe or Japan but not to China, who are pegged to our pathetic currency and see us for what we are, which explains why China’s Dagong Global Credit Rating Co. Ltd cut the U.S. local and foreign currency long-term sovereign credit rating to A-plus from AA. That should send our beloved TBT flying and, as we expected, it ironically panicked people INTO the Dollar and that made our down move in the markets look like an up move abroad:
So, if we have another day like yesterday, where the dollar rises faster than the market drops, we will still be looking good to foreign investors who may begin demanding dollars to get involved in US equities and that will send our dollar up further and make our markets look stronger even as our own commodities drop and drag our markets (when priced in dollars) down with it. Meanwhile, we are thrilled to be in cash as our cash is getting more valuable than stocks or commodities by the minute but it’s all about the 78 line on the Dollar today, just as I had said yesterday it was all about 77.
I also mentioned how the whole thing is MADNESS but we love it because it’s a predictable madness. In the morning post I reiterated our standard short on the oil futures at $87.50 and we got a drop all the way to $85.50 in yesterday’s trading but we took non-greedy exits before that as those contracts pay $5 per penny per contract! Also in the morning post I mentioned a trade idea for selling the PCLN Jan $450 calls short at $16 – those actually opened at $17.50 and finished the day at $15.50, which is why we love those trades. In the morning Alert to Members I had 2 more short trade ideas, one was the FCX Dec $100 puts at $2.75, following up on my copper comments from the morning post and those finished the day at $4.50 so a nice 63% gain on the day…
