NOV. 15th: SOME QUICK THOUGHTS THIS MORNING
The only consistency coming out of Europe is the ability for the rolling wave of contagion to sweep from one countries shore to another. There isn't one solution that hasn't arrived prepackaged with a new set of problems. Until this trend changes, there will be no consistency out of the market.
Europe may not have that ultimate solution similar to what the US market saw in 2008/2009. Europe doesn't have the cohesive thought process necessary to put together a TARP program or its own version of QE. We have already seen what has come of the EFSF program. It is essentially dead on arrival.
Of course, my concern isn't with dissecting the macro aspects of what each politician, central banker or influential analyst says. My concern is with profiting from this scenario with the least amount of risk and the maximum reward. Unfortunately, at present, the type of scenario that allows me maximum reward with minimal risk simply doesn't exist.
Equity indexes are in no mans land. Commodities that I think present significant short opportunity, such as silver, are still being steamed not yet ready to be served. Individual stocks? Forget about it. Why take on individual company risk when the entire market has become one correlated slug?
Yes, stock picking is dead. Those reptilian, mouth breathing fund managers who are taking on 20, 30 or 50 individual stock positions within their portfolios can enhance their performance and greatly simplify their lives by moving into 4-5 ETFs. That frame of thought makes a lot of Wall Street pros insecure due to the fact that it makes them irrelevant. Jurassic park comes to Manhattan.
Back to trading. Crude oil is coming up on my radar as a potential short opportunity. It should break 100 and move upwards of 105 before I decide to take a stab. I wouldn't be surprised if 105 oil coincided with a runup in equities. At that point, I would consider an inverse energy stock ETF. A bursting crude oil market and "toppy" equity market would be a proper formula for outsized gains.
Despite the early morning weakness in the futures market, we do remain range bound. Range driven markets force me into cash. That's where I am currently, with a small amount of FAZ that initiated on Friday.
You have toes, stay on them.
