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May 18 2013 Weekend Market Comment

May 18 2013 - Please see my May 11 post and doodle all the charts a little higher . . .

The market just keeps going up. ho hum, Not much to say except be careful.  For example Tuesday is often a good day for stocks, we are up 17 Tuesdays in a row. We are 12.5% above the 200 Moving Average (that is rare). We have more 52 week highs than we have had in 35 years. Now when the markets are this strong, this long, there is either a pull back coming or a short squeeze. This is a lot like what happened a few weeks ago to  my bear suit.  Imagine how much pain the bears are taking right now. If you were short equities right now and the market goes higher at some point you cover your shorts. That is an effective buying of the securities. If there is a ton of short covering right now, the market could really shoot up. If you have seen the action in Netflix and Tesla Motors they are tearing higher on the misery of short covering, soon it could be everywhere. 

OK I guess I can draw some charts for you.
In a rare flash of common sense, Gold continues to plummet. Broke the mid April support. Many gold funds are down 35%, 45% even 50% so far in 2013. 

Billionaire investor George Soros joined Northern Trust Corp. and BlackRock Inc. in cutting holdings of exchange-traded products backed by gold before a bear market in prices last month, while John Paulson maintained a stake that lost about US$165 million in the first quarter.

Gold dropped for the sixth consecutive session on Thursday, hitting its lowest level in four weeks, on a stronger dollar and battered investor sentiment.

Rallying stocks have also hurt bullion’s appeal as an alternative investment this year, leading funds to generally liquidate their gold positions. This is the "end of fear" trade I have been on about.  

I hope you were short, I was in DUST and HGD

I also hope you noted my short term trade in Juniper Networks, nice pop on CISCO's earnings. I have a trailing stop waiting to take me out at a huge profit. 

My long long long term trade (ticker TBT) in end of the bond market (See last weeks post), marched higher this week, although we had a scary blip of 1% against us one day last week. But this trade is going to be like that, as we gently move out of bonds. This is a very long term play for years to come.  In case you don't know PIMCO is one of the powerhouse firms behind the BOND market, and Bill Gross is one of the founders, so yeah this guy knows Bonds. In this video he shows a tool to understand the bond market. If you are expecting a lot high level math be ready for a pleasant surprise. This trade is just that simple. 

Of course the flavor of the moment Short YEN long NIKKEI, continues but as I warned boy this is a crowded trade.  

I am also expecting the bottom to drop out of the price of oil -- based on way too much production. Perhaps $66. No hurry on this trade it could take years until the market sees thing my way. The first clue was 2010 when commodities went up and Oil got stuck in this range. I will write a whole article later on why this is going to all end badly like Gold did.   

Ogle that Goggle
As I said last week Google is the new Apple. Google ran in last 4 weeks from 780 to 909. They have over 300 million share outstanding. Let me do the math for you, in less than a month they went up in value one whole Facebook. Just on speculation in four weeks the firm could have bought all of Facebook. But even more amazing with a PE of 27 and a forward PE of 17 for a tech company, it is really not very expensive. WOW!

McDonald's is on a Diet
McDonald's is trimming items from its menu -- blaming consumer confusion. Yeah think?