Monday, August 8, 2011

Are you keeeding mee?


DGP vs. AGQ vs. JPM

1:19 pm (Hawaii) FAZ keeps swelling larger and larger, now at 81.74 in thin afterhours trading. This is dangerous stuff here. The slightest move from the FOMC tomorrow and it's off to the races. The snapback rally is coming, however brief it may be, and I don't want to be standing in the way. So, I say no to FAZ.

Same with QID, SCO ... it takes some nimble feet and a pliant brain to reverse course when the market changes direction. And it will change. Nothing goes up or down forever. So, contrary to my views about the banksters, it's probably too late to ride the FAZ train. Contrary to my views about precious metals, it's not prime time to acquire more paper or physical gold — thought it wouldn't be horrible to get some either.

If and when whispers of QE3 hit the mainstream, FAS will run. So will AGQ. Probably EXK, too. Gold will take a break and rest up. But gold miners will likely run, as they usually do with equities. Hedge funds just might scale in. I am conflicted about holding XG through a rally and beyond. Once a rally dries up, we'll get more liquidation from the market by hedge funds, and they'll dump miners before they dump anything else.

If Bernanke says nothing tomorrow, there will be pandemonium in the market. A race to get out before zero, which is preposterous, but emotion will rule. It still won't be enough to save us from the HFTs unless you were prudent and prepared for shit hitting the fan. Who knew, though, that S&P would trounce US credit/debt twice since last Friday? I knew it could happen, just not so soon. So did a lot of people. It's accurate, no doubt. Just stunning in its timing. And I should've kept that small position in FAZ at 45 and 62. I knew it would go to 100 sooner or later, but never did I imagine it could happen within days.

Update 1:38 pm (Hawaii) The charts above include BAC, which refuses to raise capital (after taking billions in TARP), and JPM, which has come out of nowhere to declare great bullishness for gold in the past two sessions. I'd still rather be long FAZ and DGP (and physical gold) than ever own a share of BAC or JPM. (I'm actually long DGP, but not FAZ.)

Today's Debt Spiral list:
FAZ 81.85 (+31.2%)
IRE 1.16 (-5.7%)
GS 116.03 (-7.3%)
STD 8.66 (-7.8%)
BBVA 8.65 (-9.0%)
JPM 33.98 (-9.6%)
AIG 22.55 (-10.2%)
NBG 1.03 (-11.2%)
DB 42.12 (-12.6%)
C 27.91 (-16.5%)
SCGLY 6.70 (-21.8%)
BAC 6.39 (-21.8%)
FAS 12.16 (-29.4%)
* After hours prices

DJ 10,809.85 -634.76 (-5.55%)
Nas 2,357.59 -174.72 (-6.9%)
S&P 500 1,119.46 -79.92 (-6.66%)
10-yr note 2.34% -0.219 (-8.56%)

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