Market Ruminations

Friday I took my last remaining bet off table. I sold the ETF fund UGL at 89.80 per share. I placed my bet at 80.11 July 7th and closed it out July 29th. I picked up 9.69 per share for a gain of 12.1% for the month. My reasoning was that the whole market had become distorted by all the noise coming from the Ministry of Propaganda regarding the financial Armageddon that would occur if an agreement about the debt ceiling were not reached. Gold had spiked way up above the moving average line, the stock market had sold off, treasuries went through the roof so everything was askew from the scare tactics coming out of Washington. I figure things will change direction after the agreement is reached but until that direction becomes clear it is best to stand aside. I figure the market will rally significantly after the agreement is reached. If the rally fizzles we are back in the bear market. If not we may yet make one more minor high before the Fed runs completely out of bullets. The 64,000 dollar question right now is whether or not the Fed and the Government have enough firepower to keep the market levitated until after the 2012 election. If they do the whole thing will collapse in 2013. I'm leaning toward the Fed announcing a new QEIII program and the Government pulling out all the stops to keep the ship of state afloat until November 2012. Below is chart of UGL showing how far it had become extended over the moving average line.