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Plenty Of Fish

By BB Finance | Wed, 14 November 2012 15:45 | 1

No, I don’t mean the dating site. I am talking about various asset classes.

Yesterday’s big story was 10% + drop in VIX. What is the story for today?

If you have not guessed it already, it is Nat.Gas. For the past few days I have written in the blog that I am scaling in Nat.Gas. How many of you did take the trade? Because if you did, you would be a very happy person today.

Fish in the Sea

After a long time, I got some free time to Tweet in the morning when I wrote that I am expecting a bounce. We got some bounce which did not last but the most important thing is that /ES 1370 held another day. In fact after the cash market closed, SPX futures are up 4 handles and Nasdaq futures are up 15 handles. Go figure how it will be tomorrow. Let us see how it goes but I am neither short nor long equities at this point of time. The market played with bulls and bears alike. In the morning the bears covered and in the evening the bulls covered. At this rate who will be left playing the day trading game? Only your broker will laugh to the bank. Again and again I want to emphasize the point that correction does not mean collapse. We do not have to be short in every correction nor have we to chase every up tick. But we must learn to disregard the noise coming out of the Russian propaganda machine better known as “Mad as a rabid dog” blog.

I want to show you a chart from Chris Kimble.

Half Year Commodity Performance

As you can see, there are about 40 asset classes in that chart. Equity indices are somewhere in the middle and in the last 6 months they have not given much return. On the other hand risks associated with equities have never been higher. Why not look for other fish to fry.  As of now I am waiting for an upward break of Gold which is short term in nature.

The king of carry trade Euro/yen is showing a kind of double bottom.

Euro v Yen

I think a bounce up-to 102.25 is very possible in the near term. And if it closes above that level, then we can look for a good bounce in SPX. I am not saying it will happen; I just want to draw your attention to all possibilities. On the other hand if it breaks down below 100, we can safely short the market.  As of now, things do not match and 2+2 = 5. So better be safe than sorry. Even AUD is acting strange. It was up today and there is no reason for AUD to go up while cycles are down.

AUD v USD

The following table is from Stock Trader’s Almanac and it shows the DIJA performance during the Thanksgiving Week.

DJIA Performance

According to them:  The best short-term trade appears to go long into weakness this week or on Monday of Thanksgiving week and selling into any subsequent rally before the Friday of Thanksgiving week.

I find that it is good to know the seasonal pattern but we cannot absolutely always depend on past trends for a correct call. But yesterday I said that I am not going to short the market before November 23rd and this call from Stock Trader’s Almanac re-confirms my thought process.

That’s all for today. Hope you all are making money in this casino. With black Friday coming up, please remember to use the Amazon link if you plan to buy anything from Amazon.  Thanks for sharing my thoughts.

By. World of Finance

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Plenty Of Fish

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  • Stephen Hughes on November 15 2012 said:
    The majority of exports of liquefied natural gas come from the Persian Gulf; China imports liquefied natural gas from Australia, Indonesia with more than half coming from the Middle East.
    Natural Gas: While oil gets all the attention, other key products must travel through the Strait of Hormuz, including 28 percent of the world's liquefied natural gas (LNG). It is the only source of gas for India, Japan, South Korea, and Taiwan, and it is a vital fuel for reducing European dependence on Russia. The impact on the LNG market would be substantially more severe. Qatar is by far the biggest producer of LNG with a market share of 25%, in contrast to oil; there is no way of avoiding the Strait of Hormuz for LNG. This means that more than a quarter (Qatar and UAE) of global LNG capacity would be affected. Consequentially these countries, including Beijing would be hit on both ends by a blockade on one hand by a decrease in LNG deliveries, and the drastically rising oil price. The Strait of Hormuz, on the southeastern coast of Iran, is an important route for oil exports from The Islamic Republic. At its narrowest point the Strait of Hormuz is 21 miles wide, yet an estimated 17 million bbl/d flowed through it in 2011 (35 percent of all seaborne traded oil and 20 percent of oil traded world-wide). In addition to oil, liquefied natural gas (LNG) volumes also flow through the Strait. Tehran’s natural gas reserves are predominantly located offshore, in the Persian Gulf and significant production originates from onshore oil fields (associated gas). The International Energy Agency (IEA)/ Global Strategic Petroleum Reserves ("GSPR") Global strategic petroleum reserves refer to crude oil inventories held by the government of a particular country, as well as private industry, for the purpose of providing economic and national security during an energy crisis. According to the United States Energy Information Administration, approximately 4.1 billion barrels (650,000,000 m3) of oil are held in strategic reserves, of which 1.4 billion is government-controlled. The remainder is held by private industry. At the moment the US Strategic Petroleum Reserve is one of the largest strategic reserves, with much of the remainder held by the other 28 members of the International Energy Agency. The IEA was founded in response to the 1973/4 oil crisis in order to help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets. The International Energy Agency is the energy forum for 28 advanced economies. IEA member governments are committed to taking joint measures to meet oil supply emergencies. How this is not true liquefied natural gas there are no strategic world reserves as with oil.

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