Discussion in 'Economics' started by krazykarl, Aug 15, 2008.
bubbles come and bubbles go.
We saw huge shift from energy, material to financial. That reversed the commodity up trend / financial downtrend. Now this reverse looks ahead of itself. Long term high dollar keeps oil low. The low oil price drives up the market. But look at today, financial goes up and up and runs out of steam. The reverse of oil / finance co-relation may stop. Technically, oil should keep go lower and market higher. With all the bad economics and lack of good news, I worry they all start going lower. Without the finance and retail, and energy / material sector keep going lower, that drives market lower.
My hope is that oil keeps stable and market keeps the rally. But it worries me.
Wasn't a bubble large enough to lay dormant the commodity bull longer than 1 year. What we will see now is the backing down of futures players switching over to holding long the actual commodity. Hedge funds have been buying struggling grain elevators. Producers continue to back away from hedging. You hear stories about T-boone being down during the biggest oil run, 10th largest private company in america goes bankrupt taking the wrong side of oil. The CME, CBOT, NYMEX are fucked. Dumb money will now play contracts, smart money will hold the real thing going forward.
Why I always take short positions on the hot stocks that the herds go for and go long on the ones no one wants but have good fundamentals and fairly valued.
Herd Mentality was strong with that sector.
I am taking a position in DXCLX in my investment account (IRA). Strong support at 28, stop at 27, upside target 40.
I can't wait to here the wall street crowd shift to a stong dollar is good for America. As before there cry was a weak dollar was good for exports, blah blah balh..... hey it's all good.
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